Stablecoins Are a Vital Innovation That Risk Being Crushed by Misguided Fear

Imagine a world where every dollar you spend is tracked, approved, or denied in real time by a government agency. You attempt to send money to a friend for a political donation, but the transaction is blocked because the recipient is on a government “watch list.” You buy a book critical of a powerful politician and your account is flagged for review.

This dystopian future sounds outrageous but it’s the logical endpoint of a fully government-controlled and monitored monetary system for which some prominent U.S. policymakers advocate. Its defenders argue that such a government-omniscient system would prevent crime. In reality, it would destroy the core freedoms of financial privacy and autonomy. Stablecoins are an existing alternative to this dystopia. They are both a major financial innovation, and a bulwark against creeping financial authoritarianism. The U.S. Congress must support this technology as the Senate Banking Committee weighs legislation to provide clarity for the industry and its customers.

Stablecoins, digital currencies pegged to the value of traditional currencies like the U.S. dollar, provide the benefits of cryptocurrency — fast, inexpensive, borderless, and programmable transactions — without the price volatility of assets like Bitcoin. They are typically backed 1:1 with U.S. dollar cash and cash equivalents, providing stability and trust. Their programmability allows transactions to be executed automatically when specified conditions are met, unlocking enormous potential for automated finance, supply chain efficiency, and global commerce.

Senators across the U.S. political spectrum, who understand the technology’s current use cases and the vast future possibilities we can’t yet fully envision, have proposed thoughtful legislation to guide regulations that will foster innovation while protecting consumers. This collaborative approach reflects an understanding that stablecoins could revolutionize global finance, enhance financial inclusion, and preserve the U.S. dollar’s dominance in the digital age.

Unfortunately, some senators, especially Senator Elizabeth Warren (D-MA), stand in stark opposition to this progress. Rather than embracing innovation, she pursues legislation that would smother stablecoins in their infancy. Senator Warren paints stablecoins as tools for illicit activity, claiming they primarily facilitate fraud, drug trafficking, and terrorist financing. Her characterization is not just inaccurate — it’s dangerously misleading.

The data directly contradicts Senator Warren’s claims. Multiple reports from blockchain analytics firms consistently show that illicit activity represents a tiny fraction of stablecoin transactions — often less than 1% of total volume. In fact, traditional cash is far more frequently used for money laundering and illicit trade than stablecoins ever have been. Blockchain technology, with its permanent and transparent ledger, actually makes illegal activity easier to track and prosecute than cash-based crime.

Senator Warren’s misinformed worldview leads her to advocate for a closed, government-monitored financial system — one in which every transaction is scrutinized, private financial activity becomes impossible, and access to financial tools is tightly controlled. In addition to being a morally objectionable invasion of privacy, her design would be operationally impossible to implement.

It would also weaken the dollar’s global dominance, as emerging economies and developing nations would turn to other digital currencies that are easier to access and use. Her constraints could not only impede the development of an important new technology, but also disrupt and harm ordinary Americans and businesses, and people around the world, who are using stablecoins today to move value across the internet as easily as sending an email or text message, often at a fraction of traditional costs. For example:

• Major American corporations like Visa and PayPal are using stablecoins to settle some cross-border payments, reducing settlement times from days to minutes and lowering costs.
• By making dollars the default currency of the digital economy, stablecoins reinforce the dollar’s role as the global reserve currency.
• Increased global demand for dollar-denominated stablecoins increases demand for U.S. dollars and treasury securities, helping finance government borrowing at lower rates.
• In countries suffering from high inflation or capital controls, stablecoins provide ordinary citizens with a safe, dollar-denominated savings option, protecting their wealth from economic mismanagement.
• Migrant workers sending money home can do so more quickly, inexpensively, and more reliably with stablecoins than through traditional remittance services, which often charge exorbitant fees.

The Warren vision rejects the open, public, universally accessible system being developed today — a system where individuals and businesses alike can transact freely, without needing permission from banks or governments. Fortunately, there is still hope for a balanced regulatory approach.

Senators Bill Hagerty (R-TN), Kirsten Gillibrand (D-NY), Cynthia Lummis (R-WY), and Tim Scott (R-SC) have introduced the bi-partisan GENIUS Act which would create a constructive regulatory framework for stablecoins that addresses legitimate concerns while enabling innovation. The GENIUS Act, and the White House Executive Order on Strengthening American Leadership in Digital Financial Technology, will both ensure that the benefits of blockchain technology can be fully realized on open, freely accessible and transparent public blockchains.

Congress must embrace stablecoins, not fear them. The future of money is being written today. Will the United States lead this transformation, ensuring that digital dollars remain the global standard? Or will fear, misinformation, and stifling regulation hand the future of finance to other nations? The choice is clear: support innovation, enact smart regulation, and let stablecoins flourish.