We Must Regulate Stablecoins to Protect Consumers and Strengthen Our Financial System

During my years on the House Financial Services Committee, I worked to protect consumers and strengthen our financial system.

During my years on the House Financial Services Committee, I worked to protect consumers and strengthen our financial system. I’ve seen firsthand what happens when Washington drags its feet on commonsense reforms, and that’s exactly what’s happening right now with cryptocurrency regulation.

This month marks three years since the collapse of the Terra Luna stablecoin, a meltdown that wiped out billions of dollars and devastated everyday U.S. investors. It should have been a wake-up call.

Stablecoins aren’t like Bitcoin. You don’t buy them hoping their value will go up. In fact, they’re designed to do the opposite — remain stable, usually pegged one-to-one with the U.S. dollar. That’s what makes them useful. They act as a bridge between the traditional financial system and the digital one.

Because they’re faster and cheaper to send than wire transfers or credit card payments, stablecoins are becoming a go-to tool for global payments. Americans use them to send remittances, pay international contractors, and move money on crypto platforms. In many ways, they function like a modern version of the digital dollar—easy to move, instantly settled, and able to operate across borders.

But even though stablecoins are meant to be, well, stable, Terra Luna wasn’t. It crashed because it operated without meaningful oversight—no clear rules, meaningful or reserve requirements, or consumer protections. That collapse helped set off a broader chain reaction across the crypto industry, including the implosion of FTX. Investors lost money and trust evaporated, but Congress failed to act.

Both parties have had chances to lead on this issue, but the most recent failure hurts the most.

Earlier this month, the Senate failed to advance the bipartisan GENIUS Act, the most comprehensive stablecoin legislation introduced to date. It includes strong consumer protections and tough standards for how stablecoin issuers must operate. Yet, despite its merits, some Democrats blocked it.

Their reasons varied: some felt the bill didn’s go far enough. Others raised concerns about former President Trump’s crypto ties. But if I learned anything during my time in Congress, it’s that you can’t let the perfect be the enemy of the good. In a body with 100 senators and more than 400 House members, you rarely get 100% of what you want, and that’s OK. Progress means taking the wins you can, especially when consumer protection is on the line.

Doing nothing doesn’t make the risks go away. It makes them worse. It lets bad actors continue unchecked. And it cedes leadership in financial innovation to other countries.

Senator Ruben Gallego said it best: “If we don’t pass any stablecoin legislation, [Trump’s] still going to do everything he’s going to do right now. The most important thing we can do is get a strong, strong bill.” I couldn’t agree more.

Democrats have long stood for protecting consumers and ensuring fair, accountable markets. That’s exactly what the GENIUS Act aims to do. This isn’t about endorsing crypto—it’s about bringing stability and oversight to a growing part of our economy.

The alternative is letting the wild west continue while other countries pass us by—and letting American families bear the consequences.

Democrats missed a critical opportunity this time. Let’s make sure we don’t miss the next one. Ron Klink served as a Democratic member of the U.S. House of Representatives from Pennsylvania's 4th district. He served on the House Financial Services Committee.