Under the "spring breeze", the stablecoin bill has become a new battlefield for "internal fighting" in the crypto industry

Compiled by: BitpushNews Tracy

The crypto industry has ushered in its heyday in Washington. The lawsuits have dissipated, and a group of lawmakers who have received industry support have entered Congress, and the White House has also welcomed a senior official who specializes in digital assets. However, the crypto industry may have become its biggest enemy now. Due to differences such as strategy, business and ideology, fierce internal struggles are taking place within the industry.

Nic Carter, a partner at Castle Island Ventures, bluntly described the crypto community: "They hate each other." But he added: "However, they hate the outside world even more."

After years of negotiations, hopes for crypto-friendly legislation to pass Congress have increased significantly, and many leading companies are pushing for regulatory frameworks that are more in line with the characteristics of digital assets. Logically speaking, under this optimism, promoting legislation should be natural.

But now, I began to wonder which bill could be truly implemented.

Even the least controversial stablecoin bill – a regulatory framework for private digital currencies pegged to the dollar – is now caught up in the crypto industry.

Tether, led by Paolo Ardoino, is the world's largest stablecoin issuer, posted on X that the draft legislation is a means by which competitors try to "stop Tether". Richard Grenell, a former senior diplomat in the Trump administration, seemed to agree, writing in his post: "Some crypto companies are manipulating the system again, trying to eliminate competition."

Chris Pavlovski, an ally of Trump and CEO of video streaming platform Rumble (with Tether), also posted on X, saying he suspected that the **"toxic stablecoin legislation" was weakening market confidence in the crypto industry.

"Who is pushing this pile of garbage?" he added.

You know, this should be the easiest bill to pass.

In fact, despite the growing influence of the crypto industry, it remains a highly fragmented industry with intricate internal interests that are even harder to coordinate than traditional finance. In addition to basic market competition, there are also huge differences within the crypto industry on the future development direction of digital assets and related technical paths.

For Washington, "supporting encryption" is far from as simple as expected.

But for the crypto industry, it's more about survival. The industry has long been labeled as a paradise for speculators and money launderers. Now, it ushers in a critical moment to redefine itself and shape political influence—provided that industry leaders are willing to push more than just higher coin prices.

At present, the Trump administration seems to be still groping how to deal with the crypto industry. According to people familiar with the matter, the White House’s cryptocurrency advisory board has not yet been officially established, and the current plan is to hold a series of summit discussions with the industry first.

The first summit is scheduled to be held this Friday.

When I mentioned the differences within the crypto industry to Coinbase Chief Legal Officer Paul Grewal, he admitted: "This is an all-encompassing field."

"There are a lot of different people in the industry and we don't always agree completely," he said.

In fact, the word "cryptocurrency" itself implies a contradiction.

Digital assets such as Bitcoin were initially conceived as currencies, and their application in the payments field remains the core argument that underpins its long-term value. However, in the United States, the mainstream perception of cryptocurrencies is more inclined to invest in tools, and the core goal of the market is often to drive price increases.

But if the value of a currency fluctuates violently, it will be difficult to widely use in actual payments. In other words, cryptocurrencies want to become both a serious monetary system and a gold mine in the speculative market, and the two are difficult to compatible. Currently, the vast majority of crypto payments are done through stablecoins, which are essentially complementary to government fiat currencies, rather than real competitors.

Another contradiction is that the core selling point of Bitcoin is decentralization, so that transactions no longer rely on traditional financial institutions such as banks. However, the development of the crypto industry relies on centralized platforms, such as exchanges such as Coinbase and Binance, which serve as the core infrastructure for market transactions. This creates a natural division between decentralized ideals and centralized reality.

In addition, the legality and recognition of different crypto assets are also the focus of internal controversy in the industry. Especially this week, Trump posted a new round of discussions in favor of the establishment of a "strategic crypto reserve" in the hope of stocking up certain specific tokens.

The crypto industry has been roaming the boundaries of innovation and scams, and regulators need to truly clarify what kind of industry they want to support.

Washington's long-term focus on the crypto industry has focused on consumer protection and preventing illegal financial activities. At the same time, policy makers also hope to promote the development of underlying technologies to further improve financial efficiency and promote new innovations.

But it cannot be ignored that the government's policy choices will directly affect the future development of the crypto industry. Therefore, policy makers need to act cautiously when formulating regulatory frameworks to avoid unintended consequences.

This also directs the focus to stablecoins, as any relevant legislation will affect both the crypto market and the global position of the dollar.

Currently, bills proposed by both houses of the U.S. Congress aim to strengthen supervision of stablecoin issuers, requiring these tokens to be backed by highly secure assets to ensure they can be converted into US dollars at any time at face value. The core goal of this measure is to prevent credit risk from digital assets that should be anchored to the US dollar.

"The use of stablecoins is partly due to the desire of other countries to store dollar assets through it," said Nellie Liang, former deputy secretary of domestic financial affairs of the Biden administration. "So we need to establish a regulatory framework that will give these stablecoins credibility."

The current legislative direction may benefit domestic stablecoin issuers such as Circle, but may also limit Tether's operations in the U.S. market - which is one of the core controversies behind the bill.

Tether is close to Cantor Fitzgerald, who served as U.S. Secretary of Commerce Howard Lutnick, but has long faced doubts in the U.S., with regulators skeptical about the transparency and compliance of its reserve assets. To this end, Tether has recently begun to strengthen transparency and announced on Monday that it is advancing a comprehensive financial audit in response to market concerns about its reserves and stability.

However, Tether may still struggle to incorporate the upcoming legislative framework. Its reserve assets include not only ultra-safe cash and U.S. Treasury bonds, but also cover a wider range of asset classes. Additionally, if Tether is to be regulated by the United States, it will have to set up entities in the United States, which can be a major obstacle for El Salvador-based companies.

According to a report by TRM Labs, Tether involved $19.3 billion in illegal financial transactions in 2023, far exceeding his competitors.

Dante Disparte, director of public policy at Circle, did not comment directly on Tether in the interview, but he hints about tensions within the industry and described Circle as "a fully reserved, highly transparent stablecoin operator." This seems to be in a sharp contrast with Tether.

He also said that the "digital currency space race" will be won by digital dollars that comply with US law, and not all stablecoins currently meet this requirement.

George Selgin, an economist at the Cato Institute, a liberal think tank, compared stablecoins that lack clear regulation to underground distilled liquor during the Prohibition period—the ingredients are unknown, the risks are difficult to measure, and the uncertainty is full of uncertainty.

But for the entire crypto industry, the real question is: What kind of stablecoins can be regarded as "high-quality products"? At present, there is obviously no consensus within the industry.