Democrats Sound The Alarm Over Crypto Bailouts

The years-long fight to approve stablecoin legislation in the U.S. crossed a monumental milestone as the STABLE Act passed the House Financial Services Committee Thursday by a vote of 32-17.

But in the 13-hour marathon markup hearing, Democrats raised a key issue around the prospect of bailing out stablecoin issuers, should they ever run into trouble again.

In 2023, USDC lost its dollar peg after Silicon Valley Bank looked like it was set to fail. Circle, the USDC stablecoin issuer, had $3.3 billion at SVB at that time. The FDIC stepped in and backstopped all depositors and USDC regained its peg after falling below 90 cents. But what if something like that were to happen again?

Here's why bailouts could be coming to stablecoins again (even though crypto was created to avoid bailouts.)

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