It was only a matter of time before the United States had second thoughts about rapidly adopting stablecoins. Even if the White House remains supportive of fast adoption, powerful regulators are less sanguine about the fiat currency-backed cryptocurrencies.
In a speech to the Federalist Society on March 31, Federal Reserve Bank Governor Michael S. Barr noted that, Congress in 2025 passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which provides some needed clarity to issuers of stablecoins about how they can fit into the regulatory framework. He pointed out that while there remains much work do by the relevant agencies to fill in the specifics during the rulemaking process, increased regulatory certainty could lead to more rapid development of stablecoins.
Barr went on to talk about money laundering risks – par for the course when regulators talk about cryptocurrency. Not much to see here.
More significant was what he said about financial stability. “Stablecoins will be stable only if they can be reliably and promptly redeemed at par in a wide range of conditions, including during stress in the market that can put pressure on the value of otherwise liquid government debt and during episodes of strain on the individual issuer or its related entities,” he said.
“Caution is warranted because we have a long and painful history of private money created with insufficient safeguards.”
Barr noted that in the early 1800s, during the so-called Free Banking Era, the United States had competing forms of private money in the form of bank notes, which often traded below par. “There were frequent bank runs and even financial panics,” he said. Though improvements were made in the 1860s with the National Banking Acts, financial crises persisted. The particularly severe Panic of 1907, which featured a run on trust companies that offered deposit products backed by less liquid assets, led eventually to the creation of the Federal Reserve System in 1913.
Beyond these systemic financial risk concerns, incumbent banks are weighing in against crypto firms’ push to allow competitive yields, which they say would create unfair competition. Banks are actively lobbying against proposals that allow such rewards, causing a stalemate in the Senate, with many wondering if legislation can pass before the 2026 election cycle.
From what we understand, the Digital Asset Market Clarity Act’s compromise language on stablecoin yield has circulated among crypto and banking industry stakeholders in closed-door Capitol Hill sessions. A Senate Banking Committee markup is now planned for the second half of April, though the text still has plenty of detractors.
An equally important issue – and one crypto diehards often overlook – is whether the U.S. needs stablecoins. Unlike emerging markets where banking is often slow or inaccessible, the U.S. has a highly functional payment system. Most consumers and businesses find existing rails (like credit cards, Venmo, or ACH) sufficiently fast and secure, leaving no obvious market gap for stablecoins to fill in the immediate future.
Research by FIS indicates that approximately 75% of U.S. consumers would only feel comfortable using stablecoins if they were offered by a traditional bank. Most users still view stablecoins with skepticism due to concerns over security, privacy, and past high-profile de-pegging events.
Banks will undoubtedly be pleased with the FIS survey. It also found that 53.9% of respondents view banks offering stablecoins as a positive development, and the majority want traditional financial safeguards applied to digital currency. 77.4% of survey respondents believe stablecoins should be regulated like traditional payment methods, and 66.3% say FDIC-style insurance would increase their likelihood of use.
Meanwhile, though the GENIUS Act made important progress in creating a regulatory framework for stablecoins, the rate of adoption in the U.S. will largely depend on how federal and state regulators implement the statute.