The Future of Money? Why Stablecoin is the Next Big Banking Debate
By Malcolm McDowell Woods
It might have been lost in the tsunami of executive orders, decrees, statements, directives, and social media posts which has gushed from Washington, D.C. in the weeks since Donald Trump assumed the presidency, but cryptocurrency is having a bit of a moment — and it could soon be a big issue for the banking industry.
That message was shared by WBA President and CEO Rose Oswald Poels in early February, shortly after returning from a trip to the nation’s capital. While there, banking industry officials met with U.S Representative Bryan Steil, of Wisconsin’s First District. Steil chairs the House Subcommittee on Digital Assets and Financial Technology. He told the banking delegation he intended to move quickly to introduce new legislation dealing with bitcoin, specifically targeting a cryptocurrency known as stablecoin.
Developments in mid-February confirmed that such legislation was indeed on a fast track. First, newly appointed White House AI and crypto czar David Sacks told reporters that his priority was getting legislation regulating stablecoin through Congress. That announcement was almost immediately followed by the introduction of the GENIUS Act of 2025 by Senators Hagerty, Scott, Gillibrand, and Lummis. The new bill, to be put before the 119th Congress, follows up on a stablecoin bill that had been crafted by the 118th Congress. That bill passed out of the House Financial Services Committee despite objections from Congressional Democrats but wasn’t passed before that Congress adjourned.
So, why stablecoin in particular? How does it differ from other cryptocurrencies and what might it mean for the banking industry? Broadly defined, cryptocurrency is a decentralized system of digital currency maintained and distributed through online computer networks. Bitcoin, perhaps the most well-known form of cryptocurrency, has been around since 2009. Envisioned as a peer-to-peer electronic cash system, its featured anonymity and the absence of central oversight has made it popular as a tool for transactions on the dark web and money laundering. Despite that, bitcoin has continued to gain acceptance and legitimacy. In 2021, El Salvador became the first country to declare bitcoin legal tender, and its use as a method of payment has grown.
The rise in the value of cryptocurrency has attracted investors and speculators, but they have been on a roller coaster ride — by late 2021, the overall value of cryptocurrency hit a high of $3 trillion, only to plummet to $1.23 trillion by April of 2023 (by early February of this year, it attained new heights, reaching $3.7 trillion).
Stablecoin has been put forth as an alternative to that volatility, by attempting to pin the value of the cryptocurrency to a known and trusted asset.
“The difference, no pun intended,” says Oswald Poels, “is that stablecoins are supposedly more stable. Their value is typically tied to something we all more commonly understand, such as the U.S. dollar or gold, whereas bitcoin is sort of its own measure, with its value being driven by their ledger system and their own trading space … and it goes up and down based on demand, and pretty wildly fluctuates.”
The proposed GENIUS Act, like the bill drafted by the 118th Congress, attempts to create a regulatory space for stablecoin, but banking industry officials will be carefully watching to see just what constraints and levels of oversight will be created. “It should have regulatory oversight and the same kind of guardrails as the banking sector, so that the public, who trust the banking sector, will be able to trust the stablecoin sector, too,” argues Oswald Poels.
To Oswald Poels and others in the banking industry, stable coin represents both a potential threat and an opportunity. “The banking industry wants to make sure that we can play a role in the stablecoin issuance, either as a potential custodian of coins that others may own or at some point, that regulators will allow us to accept stablecoins as a form of payment on a loan,” she notes. “At the same time, we also don’t want the stablecoin ecosystem to exist completely separate from the banking world” and its numerous safeguards.
Noting the presence of fraud in the bitcoin sector, she cautions against rushing through any legislation that doesn’t adequately protect the public’s interest. As stablecoin operates across borders, for example, she suggests that its growing acceptance in other countries might partly be attributed to less diverse or less-regulated banking systems in those countries. U.S. banking officials are hoping the legislation places stronger federal oversight over stablecoin issuers (one of their concerns with the bill drafted in the previous Congress was that it placed significant oversight responsibility to the individual states).
“We believe that to be a mistake,” says Oswald Poels. “There really needs to be uniformity across all 50 states and not a patchwork of rules. That would be detrimental to the stablecoin industry itself. I think there’s a real risk for consumer harm if we end up with a patchwork of laws, rather than the federal government stepping in and regulating it responsibly on a national level.”
Whatever the language of the final legislation, Oswald Poels notes that the cryptocurrency industry is not going to go away, particularly with such a strong advocate in the White House. She’s also heard that lobbyists for the stablecoin industry are planning to spend upwards of $160 million to make their case heard to this Congress. Given all that, she says folks in the banking industry need to be educating themselves on what stablecoin is and how it may intersect with their business.
“It’s important they stay on top of these emerging issues,” she says. “I think [bankers] should certainly follow WBA and other national news publications to stay on top of the legislation as it moves forward. And be active alongside WBA in lobbying on the issue to make sure the banking industry’s concerns are heard and addressed.”
McDowell Woods is a freelance writer and an instructor of journalism and media studies at the University of Wisconsin–Milwaukee.
