A high-stakes power struggle is unfolding in Washington as traditional banks, tech giants, and cryptocurrency firms battle for control over what could become a trillion-dollar stablecoin market in the United States. At the center of this conflict are landmark legislative proposals—the Senate’s GENIUS Act and the House’s STABLE Act—that will determine who can legally issue dollar-backed tokens and under what rules.
The outcome of this legislative debate will reshape the competitive landscape for digital payments, potentially establishing new leaders in the rapidly evolving stablecoin ecosystem while creating significant barriers for others. As Congress moves closer to passing comprehensive stablecoin legislation, powerful players from banking, technology, and cryptocurrency sectors are mobilizing unprecedented lobbying efforts to influence the final rules.
Banking Sector’s Strategic Push
Bank of America has emerged as a surprisingly aggressive player in the stablecoin debate, with CEO Brian Moynihan declaring in February that the banking giant is “prepared to issue a stablecoin” if Congress provides the appropriate regulatory framework. Since Moynihan’s announcement, Bank of America has been working through trade organizations like the Bank Policy Institute and American Bankers Association to shape legislation in ways that favor established financial institutions.
The banking sector’s primary objective is clear: secure advantages that would allow banks to dominate stablecoin issuance while restricting commercial enterprises like Amazon, Meta, and other tech companies from entering the market. Banking lobbyists argue that maintaining separation between banking and commerce is essential for protecting consumer privacy and preventing anti-competitive practices.
“The reason why you do that is because if you don’t, a retail company, for example, could look at your bank account, your statements, your expenses, and make some really, really intrusive and anti-competitive decisions about how they market to you,” one person familiar with banking lobbying efforts told The Block.
However, both the Senate and House versions of stablecoin legislation currently contain provisions that would allow “qualified” nonbanks to issue stablecoins, representing a significant setback for banking sector interests. Banks are now pushing for amendments that would more heavily restrict nonbank participation, essentially attempting to “own all of it instead of open networks to exist,” according to one lobbyist familiar with Washington discussions.
The Circle-Tether Rivalry
Parallel to the banking versus tech battle, the long-standing competition between stablecoin giants Tether and Circle has intensified as legislation progresses. Circle, based in the U.S. and positioned as the compliant domestic alternative to offshore leader Tether, has been actively lobbying on Capitol Hill for years in preparation for this regulatory moment.
Circle has strategically positioned itself as the trustworthy alternative to Tether, emphasizing its transparent reserve management and regulatory compliance. The company maintains USDC reserves composed of approximately 80% short-dated U.S. Treasurys and 20% cash deposits in U.S. bank accounts, with regular third-party attestations of sufficient backing.
“The reserve is fully transparent and subject to third-party assurance that there are sufficient assets to meet liabilities. It does not contain any other assets of different risk profiles,” according to Circle’s official statements.
This approach contrasts sharply with Tether’s more diverse reserve composition, which includes 82% in cash and cash equivalents (primarily U.S. Treasury bills), 5.5% in Bitcoin, about 4% in precious metals, and roughly 8% in “secured loans” and other investments. Tether’s less transparent approach has drawn scrutiny from U.S. authorities and questions about the validity of its reserves.
Circle has attempted to leverage the “offshore illicit finance narrative” against Tether to gain advantages domestically, positioning itself as the safer, more regulated option for U.S. markets. With approximately $60 billion in USDC tokens issued worldwide, Circle remains a distant second to Tether’s $145 billion in USDT stablecoins, but stands to benefit significantly from U.S. legislation that might disadvantage foreign issuers.
Tech Companies Enter the Fray
The legislation has also sparked debate about whether major technology companies should be allowed to issue stablecoins. Some lawmakers, including House Financial Services Committee ranking member Maxine Waters (D-CA), have expressed strong concerns about allowing commercial enterprises like Walmart, Amazon, and even Elon Musk’s X platform to launch their own stablecoins.
“Without that separation, commercial companies like Walmart, Amazon, Facebook, all could all launch their own stablecoin,” Waters warned during a recent committee hearing. “Your very own co-president Elon Musk could also launch his own stablecoin on X under this bill.”
Waters also raised concerns about potential conflicts of interest arising from World Liberty Financial, the DeFi project backed by President Donald Trump, launching its own stablecoin. The intersection of politics and cryptocurrency has added another layer of complexity to the legislative debate.
However, proponents of broader access argue that the focus should be on meeting necessary safety standards rather than restricting participation based on business type. “Getting too caught up in whether issuers are a pure fintech startup or a massive company like Amazon might be missing the point,” said Aishwary Gupta, Polygon’s Head of Payments and Liquidity. “What really matters is activity, issuing the stablecoin and the risks that come with it.”
Legislative Framework and Market Impact
Both the Senate’s GENIUS Act and the House’s STABLE Act focus specifically on “payment stablecoins” designed to function as new digital payment rails, facilitating less expensive transactions while enhancing efficiency, transparency, and security. The legislation seeks to require issuers to maintain assets equal to the number of stablecoins issued on a 1:1 basis, held in highly liquid assets like cash deposits, U.S. Treasury bills, money market funds, or central bank reserve deposits.
The bills differ somewhat in their approach to foreign issuers. The STABLE Act is described as “more buttoned down” regarding foreign market access, requiring foreign issuers to abide by U.S. laws to do business in the country. The GENIUS Act takes a more permissive approach, allowing foreign issuers to operate in the U.S. market as long as they don’t issue stablecoins domestically.
This distinction could significantly impact Tether, which recently moved its headquarters to El Salvador and has indicated interest in competing in the U.S. market. CEO Paolo Ardoino recently made his first trip to the U.S., speaking publicly in Washington, D.C., and New York City, and later announced consideration of a U.S.-based Tether subsidiary focused on institutional clients.
Economic Implications and Future Outlook
The outcome of stablecoin legislation carries profound economic implications. Banks are concerned that widespread adoption of nonbank-issued stablecoins could cause account holders to keep less money in traditional bank accounts, potentially undermining banks’ ability to make loans to consumers and businesses.
“Stablecoins could compete with bank deposits and undermine the ability of banks to make loans to consumers and main street businesses,” warned Rep. Stephen Lynch (D-MA).
Conversely, proponents of broader access argue that competition will ultimately benefit consumers and the country. “My broad philosophy is that you put forward a framework, allow the market to determine winners and losers,” said Rep. Bryan Steil (R-WI), co-author of the STABLE Act. “As you get more people coming online and engaging in competition at the end of the day, that’s good for consumers and good for the country.”
The legislative debate occurs against the backdrop of painful memories of recent financial disasters, including the Terra-Luna stablecoin debacle and the collapse of Silicon Valley Bank. These events have heightened focus on ensuring stablecoin issuers maintain adequate capital reserves and transparent operations.
As Congress moves toward finalizing stablecoin legislation, the battle for market control continues intensifying behind the scenes. Traditional banks, tech giants, and cryptocurrency firms are all investing heavily in lobbying efforts, recognizing that the outcome will establish the competitive framework for years to come.
The resolution of these “stablecoin wars” will not only determine which companies thrive in the emerging digital payments landscape but also shape the broader relationship between traditional finance and the cryptocurrency ecosystem. With billions of dollars at stake and the future of digital payments hanging in the balance, the legislative outcome represents one of the most significant policy decisions affecting the cryptocurrency industry to date.
This article reflects information available as of April 17, 2025. Legislative developments and market conditions may have evolved since publication.
