Congress Should Stop Treating Stablecoins Like Securities

Why does Washington keep attacking stablecoin innovation?

Congressional hearings in May 2026 showed that regulators still cannot agree whether a dollar-backed token is a security, a commodity, money, or something new. The confusion is not accidental, because it lets bureaucrats pick winners and choose which firms can survive the next enforcement sweep.

The stablecoin market now carries more than $240 billion in circulating value, according to sector trackers. Tether’s USDT alone accounts for roughly $143 billion. Circle’s USDC trails at about $61 billion. Those numbers are not niche. They represent real demand for programmable dollars that settle in seconds rather than waiting for the Automated Clearing House.

Yet the Securities and Exchange Commission keeps treating issuers like securities firms. The Commodity Futures Trading Commission claims jurisdiction too. The Treasury Department watches sanctions risk. State banking supervisors issue fifty different sets of rules. The result is a patchwork that benefits incumbent banks and punishes startups that cannot afford armies of compliance lawyers.

Texas is one of the few states that has moved in the right direction. The Texas Department of Banking clarified that stablecoins backed one-to-one by cash or cash equivalents are not securities under state law. Wyoming’s special purpose depository institution charter, first authorized in 2019, lets digital asset firms custody reserves without becoming traditional banks. Those models work. They should be copied, not overruled.

The cost of federal ambiguity is measurable. Staff Accounting Bulletin No. 121, issued by the SEC in 2024, forced banks to list crypto assets they custody as both assets and liabilities on their balance sheets. That capital charge pushed JPMorgan, BNY Mellon, and State Street away from offering crypto custody to most customers. The Government Accountability Office later noted that the bulletin went through no formal rulemaking process. Congress can fix that with a simple statute.

What would a clear stablecoin framework actually look like?

A sound federal law would define payment stablecoins narrowly, require one-to-one reserve backing with Treasuries or deposits, mandate monthly public audits, and place enforcement with prudential banking regulators rather than securities cops. That structure would protect consumers without suffocating competition or forcing innovation offshore.

The House Financial Services Committee passed a payment stablecoin bill in 2025 with bipartisan support. The measure would authorize nonbank issuers to operate under a federal charter, cap commercial paper holdings, and require issuer reserves to be bankruptcy remote. Those provisions mirror the stringent rules already imposed by New York’s Department of Financial Services on its limited purpose trust companies.

Under the proposed framework, a stablecoin issuer could not rely on risky corporate debt to back tokens. That prohibition matters. During the 2023 banking stress, Circle briefly lost its peg when Silicon Valley Bank collapsed because a portion of USDC reserves sat at the failed lender. A clean reserve rule would prevent that panic from repeating.

Regulatory clarity would also help the dollar compete globally. China’s central bank digital currency, the e-CNY, is already used in cross-border settlement pilots across Southeast Asia and the Middle East. The Atlantic Council reports that more than 130 countries are exploring central bank digital currencies. Private dollar stablecoins can extend American monetary influence without creating a Federal Reserve retail account that surveils every cup of coffee.

The alternative is rule-by-enforcement. The SEC sent Wells notices to multiple stablecoin projects in 2024 and 2025. Some firms relocated to Switzerland, Singapore, or the United Arab Emirates. Capital and talent are mobile. Washington’s slow walk is a gift to foreign competitors.

How can Texas and Wyoming show the rest of the country the way?

Texas and Wyoming have proven that states can supervise digital asset firms without destroying them or driving them overseas. Their success undermines the claim that only Washington can keep crypto markets safe while showing that federalism still works in the digital age.

In 2025, Texas lawmakers passed House Bill 425, which clarified reserve requirements for stablecoin issuers operating under state money transmitter licenses. The bill requires quarterly attestations from licensed public accountants and gives the Texas Department of Banking authority to examine reserve custodians. Issuers that meet the standard can serve Texas residents without begging for federal permission.

Wyoming’s stable token act, signed in March 2025, allows the state treasurer to issue a tokenized version of state funds held in reserve. The token runs on a public blockchain and is redeemable on demand. If a state with fewer than 600,000 people can build a blockchain dollar without losing control of reserves, then the federal government has no excuse for dithering.

Other states should follow. Florida and Nebraska have already introduced legislation modeled on Wyoming’s SPDI charter. Utah created a blockchain and digital innovation task force in 2024. This is the federalism the Founders envisioned. Laboratories of democracy produce better results than a single regulator in Washington who has never written a line of code.

What happens if Congress fails to act?

If Congress does not pass a stablecoin framework this session, the United States will cede leadership in digital dollars to jurisdictions that move faster. The damage will appear in lower trading volumes, fewer startups, weaker payment rails, and a smaller role for the dollar abroad.

Delaware’s dominance in corporate law did not happen because Congress designed it. It happened because Delaware offered clear rules and competent courts. Switzerland became a hub for private banking for the same reason. Countries that give market participants certainty attract capital. Countries that issue vague threats do not.

The stablecoin market is not going away. Consumers want fast, cheap, borderless payments. Developers want programmable money. Immigrants want to send remittances without paying Western Union fees that can reach 6 percent of the transfer. A stablecoin law would serve all of them while preserving the dollar’s status as the world’s reserve currency.

Washington should stop fighting the future. It should set clear rules, protect reserves, punish fraud, and let Americans build. The Alamo Post believes that freedom and sound money go together. On this issue, the facts are on the side of liberty.