Congress Must Fix Flaws in Stablecoin Regulation to Prevent Systemic Risks

The U.S. Senate recently passed the bipartisan GENIUS Act, aiming to establish a regulatory framework for stablecoins. A similar bill, the STABLE Act, is moving through the House, with President Trump eager to sign legislation this year. While this marks a long-overdue step toward stablecoin regulation, the current proposals are flawed and risk creating costly duplication.

Both bills allow stablecoin issuers to choose from up to 55 different regulators, including state and federal agencies like the SEC, OCC, FDIC, and others. This fragmented system invites regulatory arbitrage, increases costs, and mirrors the same mistakes that led to the 2008 financial crisis. The bills even require burdensome joint rulemaking processes, which historically result in delays and infighting among agencies.

Crucially, interest-bearing and security-like stablecoins remain outside the proposed frameworks, leaving critical gaps. Instead of overlapping jurisdictions, Congress should assign a single federal regulator—ideally the Federal Reserve—to oversee stablecoins. This would reduce inefficiency, prevent regulatory turf wars, and enable faster, smarter policy decisions.

Stablecoins are rapidly becoming essential in global finance. Their failure could trigger a domino effect, destabilizing financial markets and undermining the U.S. Treasury market. A clear, streamlined oversight structure is necessary to manage these risks and support innovation.

Fixing the current proposals is simple but urgent. Congress must unify oversight, include all stablecoin types, and modernize financial regulation to match the pace of fintech evolution. Without these changes, the U.S. risks falling behind in shaping the future of digital finance.