Consumer Reports Urges House Financial Services Committee to Strengthen Flawed Bill
WASHINGTON DC – Consumer Reports urged the House Financial Services Committee today to address several key gaps in regulation, consumer protection, and systemic risk management in a proposed bill that creates a regulatory framework for stablecoins – a type of digital asset pegged to the U.S. dollar or other fiat currencies. The Stablecoin Transparency and Accountability Act for a Better Ledger Economy (STABLE) Act of 2025 will be the subject of a hearing by the Committee today at 2:30pm EST, which will be livestreamed.
“The 2025 STABLE Act is being touted as a way to bring oversight to the stablecoin industry, but in reality, it weakens existing safeguards and creates a roadmap for companies like Amazon, Meta, and Google to enter the banking sector without following banking regulations,” said Delicia Hand, senior director, digital marketplace, at Consumer Reports.
Hand continued, “Stablecoins should enhance financial stability and consumer access – not give unregulated tech companies more power over the economy. If Congress truly cares about financial fairness, it must fix these major flaws before moving forward.”
Stablecoins are a type of cryptocurrency where the value of the digital asset is tied to a government-issued currency, exchange-traded commodity, or another cryptocurrency. While stablecoins are meant to stabilize digital assets, reserves held by asset-backed stablecoins have been subject to market, credit and liquidity risks. There are additional risks due to unregistered, under regulated or unregulated issuers and service providers, the opacity and complexity of the crypto ecosystem, potential conflicts of interest between issuers and consumers, and a lack of recourse for lost or stolen crypto-assets.
Consumer Reports highlighted a number of concerns about the bill:
Big tech could enter banking without oversight: The bill removes key protections from the 2024 McHenry compromise, allowing tech giants to acquire stablecoin issuers without being subject to the Bank Holding Company Act. This could lead to surveillance, market manipulation, and the monopolization of payments without regulatory guardrails.
Stablecoin issuers can hold risky, uninsured reserves: While the bill requires stablecoin reserves to be backed 1:1, it does not require federal insurance or independent stress testing. Consumers could lose access to their funds if a stablecoin issuer fails, as was the case with the collapse of the Silicon Valley Bank in 2023.
No protections against delayed or expensive redemptions: The bill allows issuers to set their own redemption policies – meaning they could charge high fees, delay withdrawals, or deny redemptions in a crisis. Unlike traditional bank deposits, stablecoin holders are not protected by the FDIC.
Drains money from local banks, hurting small business lending: Because stablecoin issuers don’t lend deposits back into local economies, a widespread shift to stablecoins could reduce access to mortgages, small business loans, and community reinvestment. Unlike traditional banks, stablecoin issuers are not required to support community lending under the Community Reinvestment Act.
Risk of Treasury market disruptions: The bill requires stablecoin issuers to hold a large share of their reserves in U.S. Treasuries, reducing the availability of Treasuries for banks, pension funds, and other financial institutions. If the stablecoin market grows large enough, it could create unexpected liquidity risks in financial markets.
Consumer Reports is urging members of the Committee to strengthen the bill by adopting a number of critical improvements, including:
- Block big tech from issuing stablecoins unless they follow banking laws
- Strengthen reserve requirements with independent audits and FDIC-like insurance for consumers.
- Guarantee 24-hour redemptions with no excessive fees or delays
- Ensure stablecoins support local economies by requiring community reinvestment
- Prevent Treasury market disruptions by setting limits on stablecoin issuer holdings
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Founded in 1936, Consumer Reports (CR) is an independent, nonprofit and nonpartisan organization that works with consumers to create a fair and just marketplace. Known for its rigorous testing and ratings of products, CR advocates for laws and company practices that put consumers first. CR is dedicated to amplifying the voices of consumers to promote safety, digital rights, financial fairness, and sustainability. The organization surveys millions of Americans every year, reports extensively on the challenges and opportunities for today’s consumers, and provides ad-free content and tools to 6 million members across the U.S.