US Senator Kirsten Gillibrand has raised concerns that yield-bearing stablecoins could undermine the traditional banking system, particularly affecting the provision of mortgages and small business loans. Speaking at the 2025 DC Blockchain Summit, Gillibrand stated that stablecoin issuers should not be entitled to Federal Deposit Insurance Corporation protections, as they are not banks. She emphasized the need for regulations that restrict stablecoin issuers from offering yield-bearing opportunities to ensure consumer safety and compliance with existing laws. Gillibrand warned that if individuals can earn interest on stablecoins, it could lead to a decline in deposits at local banks, jeopardizing their capacity to issue loans and ultimately destabilizing the financial services system relied upon by businesses and homeowners. Furthermore, she is a co-sponsor of the GENIUS stablecoin legislation, which aims to establish a regulatory framework for digital fiat tokens and includes provisions for anti-money laundering and consumer protection. Critics argue that such legislation may pave the way for a centralized digital dollar, raising concerns about financial censorship and government control over personal finances.

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