The Power Struggle behind the Stablecoin Bill Regulatory Dispute between the Federal Government and States, Beyond Partisan Politics.

The Power Struggle in Stablecoin Bill Dispute Federal Government vs. States, Beyond Partisan Politics.

The most interesting aspect of the stablecoin bill controversy is not the competition between the two parties, but the dispute over regulatory authority between the federal government and the states.

Author: Leo Schwartz, Fortune Crypto

Translation: Babywhale, Foresight News

Translator’s Note: On the evening of July 27th Beijing time, it was reported that U.S. House lawmakers failed to reach a bipartisan agreement on stablecoin legislation. Patrick McHenry, Chairman of the Financial Services Committee, stated that negotiations had reached an impasse due to opposition from the White House. Democratic leaders, on the other hand, stated that it was McHenry who stopped the negotiations. Later, on July 28th at noon Beijing time, the U.S. House Financial Services Committee tweeted that the committee had passed the “Payment Stablecoin Transparency Act.”

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Although the House Financial Services Committee did create some memorable moments last week, legislation is not always smooth sailing.

Post-event commentary suggests that the two bills passed by the House Financial Services Committee, one regarding regulation of the cryptocurrency market structure and the other regarding stablecoins, received moderate support from both parties, which is a significant victory. To some extent, this is correct because the core political goal of the industry is legalization, whether through direct regulation or legislative recognition of regulation, it is necessary.

Legislation on market structure always seems to be a long shot, and the above situation seems to be the case – the passage of this bill is an important step forward in advancing the dialogue and overcoming the obstacles that others have encountered.

It is difficult to say that the stablecoin bill has failed, as it has always been the most likely legislative effort, with then-Chairwoman Maxine Waters (Democrat, California) and Congressman Patrick McHenry (Republican, North Carolina) coming close to reaching a final version last year. Their roles have changed this year, but it seems they still have the intention to push for legislation. When McHenry proposed a version that only Republicans would participate in earlier in this session, onlookers attributed Maxine Waters’ sense of defeat to political manipulation.

However, in the discussion of the two bills, the stablecoin bill was more controversial and received less support in the end. Although a few Democrats voted in favor, the majority expressed opposition in increasingly heated hearings. As mentioned by Pedersen on his Twitter.

According to McHenry, the main obstacle comes from the White House. Subsequent reports show that the question of whether to prioritize state-level or federal-level regulation in the debate over stablecoin regulation has been a problem. The Biden administration, especially Lael Brainard, Chair of the National Economic Council, advocates federal priority (the Republican version still sets a federal baseline for stablecoin regulation requirements).

The magical thing about this dispute is that it does not come from partisan competition. Remember, the only comprehensive supervision of stablecoins in the United States is in New York, thanks to the New York Department of Financial Services. Earlier this year, Adrienne Harris, the Democratic-appointed Superintendent of the New York Department of Financial Services, testified before the House Financial Services Committee, advocating for an approach that would preserve New York’s autonomy. There was also a strange thing at the hearing, where Maxine Waters seemed to be unclear about whether New York had a stablecoin regulatory system.

According to an anonymous Democratic staff member of the committee, the New York Department of Financial Services (DFS) has been involved in discussions on legislation, advocating for a regulatory mechanism that operates on a state-by-state basis, which the White House subsequently opposed. Of the five Democratic members of Congress who voted in favor of the bill, two are from New York: Ritchie Torres and Gregory Meeks. A spokesperson for the DFS declined to comment to Fortune Crypto.

As a result, new divisions have emerged regarding the regulation of cryptocurrencies, which are not based on party affiliation, but rather on other issues such as state regulation versus federal regulation. When I asked the staff member why most Democrats were opposed to at least preserving the New York system, he replied, “It’s a million-dollar question.”

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