U.S. Senator: Yield-generating stablecoins could severely impact traditional banking and mortgage systems, calling for stricter regulation.

U.S. Democratic Senator Kirsten Gillibrand recently stated that stablecoin issuers offering yield-generating products could pose a threat to traditional banking, and called for strict regulation of them.

Senators call for restrictions on stablecoin issuers offering interest

At the 2025 DC Blockchain Summit held in Washington D.C. on March 26, New York Democratic Senator Gillibrand pointed out that stablecoin issuers should not provide interest on their products, as this could undermine the appeal of local banks and subsequently affect their ability to offer home mortgages and small business loans.

Sourse：Rumble

If stablecoin issuers offer interest, then people will lose the motivation to deposit funds in local banks. Without deposits, small banks will no longer be able to provide loans, which will lead to the collapse of the financial services system that people rely on for their livelihoods.

Financial giants rush into the stablecoin market: whether to earn interest becomes the key to popularity

However, as major financial institutions actively lay out the era of stablecoins, whether or not to yield has also become one of the characteristics of competition among various companies:

Bank of America (: intends to issue its own stablecoin after regulatory implementation.

Standard Chartered ) plans to launch a stablecoin pegged to the Hong Kong dollar.

Custodia and Vantage Bank: jointly launched the bank stablecoin Avit, providing tokenized USD checking account services.

PayPal: Expanding the application of stablecoin PYUSD, integrating it into more commercial payment scenarios.

Stripe: Acquired the stablecoin platform Bridge for $1.1 billion, demonstrating confidence in the future of digital payments.

Figure Markets: The issuance of the yield-generating stablecoin YLDS has now been approved.

Revolut: Explore the issuance of its own stablecoin.

Visa: It is expected to collaborate with European banking giant BBVA to launch a euro stablecoin next year and provide stablecoin issuance services to banks.

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Promote strict financial regulation in New York State

In this regard, Gillibrand is also proud that New York State has the strictest financial regulations in the world and suggests applying these regulations to all areas of financial services:

Whether at the state or federal level, these regulations should apply to stablecoin issuers to ensure compliance with existing laws and protect consumer safety.

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Progress and Controversies of Stablecoin Legislation

As a co-sponsor of the "U.S. Stablecoin National Innovation and Establishment Act (GENIUS Act)," Gillibrand, along with Senator Bill Hagerty, introduced it in February to establish a comprehensive regulatory framework for digital currency tokens.

Earlier this month, Hagerty updated the bill to include stricter anti-money laundering provisions, know your customer ( KYC ) verification requirements, financial transparency regulations, and consumer protection measures.

However, the bill has also sparked some criticism. Jean Rausis, co-founder of the decentralized exchange platform Smardex, pointed out that this could be an attempt to establish a central bank digital currency (CBDC) in the United States through privatization measures:

Centralized stablecoins may provide avenues for financial scrutiny and state monitoring, ultimately allowing governments to freeze funds or exclude individuals from the financial system.

(Trump clears obstacles to innovation! Former CFTC Chairman Giancarlo: CBDC could pose a threat to Bitcoin, and by 2035, all assets will be on-chain)

As stablecoins and digital assets become increasingly popular, the boundaries and roles of financial regulation are also facing the challenge of redefinition. Gillibrand's warning reflects legislators' deep concern about the balance between traditional banking and emerging financial technologies. How to achieve consensus between innovation and stability in the future will be a key issue in U.S. financial policy.

This article "U.S. Senator: Yielding stablecoins could severely impact traditional banks and mortgage systems, calling for stricter regulations" first appeared in Chain News ABMedia.