US Stablecoin Bill Advances Despite Opposition from Democrats and White House

US Stablecoin Bill Advances Despite Opposition from Democrats and White House

The Contentious Journey of Stablecoin Legislation Through the U.S. Congress

The blockchain industry witnessed a significant development in stablecoin legislation as it progressed in the U.S. Congress. Although this advancement brings hope for clearer regulations, its path has not been free of partisan conflicts. A Republican-supported bill managed to pass the House Financial Services Committee, setting it up for a vote on the House floor. However, its final hurdles lie in the Senate and a presidential signature.

Chair Patrick McHenry (R-N.C.) announced the progress of stablecoin legislation during a hearing in the House Financial Services Committee. However, the lack of bipartisan support and the blame placed on White House objections by McHenry marred the development. Maxine Waters (D-Calif.), the panel’s top Democrat, accused McHenry of halting negotiations, leading to the breakdown before the hearing. This clash overshadowed what otherwise should have been a milestone achievement in stablecoin regulation in Congress.

The news of stablecoin legislation moving to the next stage comes on the heels of other crypto-related bills advancing to a vote in the House of Representatives. This marks the first time that laws solely dedicated to cryptocurrency issues have progressed to this level. Additionally, the House Agriculture Committee also approved a crypto markets oversight bill, further expanding the legislative efforts within the industry.

The disappointment expressed by McHenry regarding the outcome of stablecoin legislation is due to the breakdown of negotiations after 15 months. The exact details of the disagreement between McHenry and the executive branch were not disclosed. Moreover, the bill’s success relies not only on gaining support in the Democrat-led Senate but also on its ability to represent a bipartisan effort rather than a solely Republican one. The decision by McHenry to push the bill forward in the face of committee Democrats’ objections may gain recognition among fellow Republicans but could potentially hinder its chances of becoming law.

Waters raised concerns about the bill, deeming it “deeply problematic and bad for America.” She argues that the legislation would create 58 different licenses, leading to a race to the bottom among stablecoin issuers. Moreover, the bill’s provisions related to reserves and the stance of federal regulators, particularly the Federal Reserve’s control over issuers licensed by state agencies, were contentious points between the two parties.

The Clarity for Payment Stablecoins Act, introduced by McHenry, seeks to establish a regulatory framework for cryptocurrencies tied to the value of fiat currencies. Stablecoins play a vital role in the crypto market, providing investors with a stable asset to trade and mitigate the volatility of other cryptocurrencies.

The markup session of the stablecoin bill witnessed combative exchanges between Republicans and Democrats, highlighting the ongoing stalemate in stablecoin oversight. Democrats expressed their concerns about the lack of opportunities to amend the bill and requested a postponement of the vote. Stephen Lynch (D-Mass.) suggested delaying the voting until September, urging McHenry to continue working on the bill during the August recess and finalizing it afterward.

While Republicans managed to push forward their agenda, Democrats voiced their reservations about another bill related to self-custodied wallets for crypto assets introduced by Rep. Warren Davidson (R-Ohio). Despite concerns raised about potential illicit use and asset concealment from the government, the committee approved the bill by a vote of 29-21.

The stance of the executive branch, including the White House, the Federal Reserve, and the U.S. Treasury Department, remains unclear. The lack of response from the White House spokesperson and Waters’ statement about the Fed and Treasury not supporting the bill underscores the challenges in achieving consensus on stablecoin legislation.

In conclusion, the journey of stablecoin legislation through the U.S. Congress has been marked by partisan clashes and disagreements. While progress has been made in the House of Representatives, the bill’s fate still lies in passing the Senate and receiving presidential approval. The concerns raised by Democrats regarding the bill’s provisions and the lack of opportunities for amendments further complicate the process. As the industry waits for further developments, the need for clear and balanced legislation for stablecoins remains crucial.

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