Republicans on the House Financial Services Committee unveiled their own version of a draft stablecoin bill that would provide for a narrower focus overall and a bigger role for state regulators than a prior proposal.
(Bloomberg) — Republicans on the House Financial Services Committee unveiled their own version of a draft stablecoin bill that would provide for a narrower focus overall and a bigger role for state regulators than a prior proposal.
The GOP document, released Monday, makes a number of changes to draft legislation that was released by the panel ahead of a subcommittee hearing last week. That earlier version, which was circulated internally among members in September, was a byproduct of bipartisan negotiations that stalled at the end of last year.
Maxine Waters, the top Democrat on the Financial Services Committee, caught some of her colleagues by surprise when she said at last week’s hearing that the panel should start completely from scratch, noting that negotiations with Republican Chairman Patrick McHenry were never completed and too much has happened with the crypto industry in the interim, including the collapse of Sam Bankman-Fried’s FTX empire. She also expressed frustration at Republicans working on their own version of legislation.
A representative for Waters didn’t immediately respond to a request for comment on the draft released Monday.
The rift between the two sides doesn’t bode well for reaching a bipartisan consensus in the near term. Crypto companies, like stablecoin issuer Circle Internet Financial, have said it’s imperative for the US to create a federal framework for the asset class, especially as other countries move ahead.
One of the biggest changes in the Republican-led draft would give state regulators more power to charter stablecoin issuers. Under the older proposal issuers could get state approval but they’d then have to register with the US Federal Reserve. The newer version still gives the Fed ultimate enforcement authority by allowing the central bank to take action if the state fails to do so at its recommendation or to provide a plan responding to any concerns that have been raised.
The GOP bill is also about half the length of the earlier draft. A senior Republican committee staffer said on a call with reporters that the bill focuses solely on the issuance of stablecoins designed to be used as a medium of exchange and denominated in US dollars, among other characteristics — what the bill refers to as “payment stablecoins.”
The earlier draft included measures related to custodial service providers and trading platforms that might instead get addressed in a separate proposal on market structure, the staffer said. The bill also doesn’t touch on algorithmic stablecoins similar to the TerraUSD token that failed last year, kicking off a domino effect that helped fuel the collapse of hedge fund Three Arrows Capital, Voyager Digital, and, most prominently, Alameda Research and FTX.
The document circulated in September would have put a two-year ban on those kinds of coins.
Republicans said the draft has been shared with Waters’ team and the hope is that it can act as a starting point to pick up negotiations again.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.