The latest stablecoin bill introduced in the Senate, if passed, could embolden banks to step into the stablecoin markets, according to ratings agency S&P Global Ratings.

The Lummis-Gillibrand Payment Stablecoin Act, introduced last week by Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., would bring clarity to regulations that "should encourage banks into the stablecoin market," the ratings agency said in a note on Wednesday. Tether, however, would not be permitted under the proposed bill, which could reduce demand for the non-U.S. based stablecoin.

"An approval of the stablecoin bill would accelerate institutional blockchain innovation, in particular for tokenization or digital bond issuances involving on-chain payments," the ratings agency said. "The growth of …