A bipartisan group of US senators has told the Treasury Department that its approach to regulating stablecoins must keep state regulators in the game. The lawmakers, whose names were not disclosed, said the application of federal stablecoin laws should be done in a way that 'preserves and promotes State participation.'
Why state oversight matters
The senators' message comes as the Treasury works on implementing rules for stablecoins, a type of cryptocurrency typically pegged to a fiat currency like the dollar. Several states have already developed their own regulatory frameworks for digital assets, and the lawmakers want to ensure those efforts aren't overridden by federal action. The group argued that state-level supervision can provide tailored oversight that a one-size-fits-all federal approach might miss.
What the senators said
In their communication to Treasury, the senators stressed that preserving state participation is not just about protecting state authority—it's about fostering innovation and consumer protection. They said the Treasury's application of stablecoin laws should explicitly allow states to continue their own licensing and examination programs. The exact wording of the letter or statement was not released, but the core demand is clear: don't sideline the states.
What's at stake
Stablecoins have drawn increased attention from regulators after the collapse of TerraUSD in 2022 and the broader crypto market turmoil. The Treasury has been leading an interagency effort to craft rules that address risks like runs on stablecoins, money laundering, and consumer harm. But the senators worry that a heavy-handed federal approach could stifle the state-level experimentation that has already produced workable models.
The pushback is notable because it comes from both sides of the aisle. Bipartisan support for state involvement suggests that the Treasury will face pressure to craft rules that leave room for state regulators to operate. How the department responds could shape the future of stablecoin oversight in the US.
The Treasury has not yet publicly responded to the senators' request. The department is expected to release its final recommendations on stablecoin regulation later this year.
