Senator Urges Stronger Regulation of Digital Currencies

SENATOR GILLIBRAND WARNS AGAINST WATERED-DOWN STABLECOIN BILL, SAYS TOUGH REGS NEEDED TO PREVENT SVB-LIKE BANK RUN

March 26, 2025 - U.S. Senator Kirsten Gillibrand has sounded the alarm against a proposed stablecoin bill that she claims is too soft on regulatory oversight, warning that it could lead to another Silicon Valley Bank (SVB)-style bank run.

Gillibrand, a Democrat from New York, took aim at a bipartisan bill introduced earlier this month, which aims to create a regulatory framework for stablecoins. The senator argued that the proposed legislation falls short of providing the necessary safeguards to prevent a repeat of the SVB debacle.

"We can't let the same mistakes happen again," Gillibrand said in a statement. "We need tough regulations in place to prevent another bank run, and that means going beyond the status quo."

The senator's comments come as lawmakers are under pressure to respond to the collapse of SVB, which was sparked by a run on deposits by customers who feared the bank was insolvent. The incident has raised concerns about the stability of the financial system and the need for greater regulatory oversight.

Gillibrand's proposal would require stablecoin issuers to meet stricter capital requirements, undergo regular stress tests, and provide greater transparency around their reserves and risk management practices. The senator also wants to give regulators the authority to impose stricter capital requirements on stablecoin issuers that pose a systemic risk to the financial system.

The senator's warnings have been echoed by other lawmakers who have expressed concerns about the potential risks posed by stablecoins. However, some industry stakeholders have argued that the proposed regulations are too onerous and could stifle innovation in the digital asset space.

The debate over stablecoin regulation is likely to continue in the coming weeks and months as lawmakers and regulators grapple with the implications of the SVB collapse. With the financial system still reeling from the fallout, Gillibrand's call for tougher regulations is likely to resonate with many lawmakers and regulators who are seeking to prevent another crisis.