The U.S. House Financial Services Committee passes the U.S. Stablecoin Regulation Bill.

U.S. House Financial Services Committee approves Stablecoin Regulation Bill.

Author: Jesse Hamilton, Jack Schickler, CoinDesk; Translation: Song Xue, LianGuai

This is the progress made so far in stablecoin legislation in the US Congress, but this progress has been affected by partisan conflict.

A Republican-supported bill was vetoed by the committee, so it can be voted on in the House of Representatives, with the Senate and the President’s signature being its final obstacle.

On Thursday, US House of Representatives members passed the next step of stablecoin legislation, despite the House Financial Services Committee pushing the bill for potential full voting without bipartisan support, because Chairman Patrick McHenry (R-North Carolina) accused the White House of opposition causing a deadlock.

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The hearing on Thursday ended with 34 votes in favor and 16 votes against, allowing the bill to be more widely deliberated in the House of Representatives. Maxine Waters, the Democratic leader of the committee and a Democrat from California, said that negotiations were actually terminated by McHenry after the breakdown of negotiations the night before the hearing. This struggle tarnished the climax of progress on stablecoin in Congress.

“Today I had hoped to announce an agreement with senior members on stablecoin legislation,” McHenry said at the start of the hearing. “That is not the case… it is the White House’s unwillingness to compromise that has once again led to a stalemate in negotiations.”

The day before this announcement, lawmakers focused on finance proposed three bills on cryptocurrency issues and voted on them in a full House meeting, marking the first time they have introduced legislation specifically addressing this topic. Also on the same day, the House Agriculture Committee subsequently approved a cryptocurrency market regulation bill.

McHenry said he was “disappointed” with the outcome of the stablecoin work after 15 months of negotiations, but did not explain the details of the latest differences with the administration.

Any US stablecoin bill must win the support of the Democratic-led Senate, so a bill proposed solely by House Republicans, rather than a bipartisan effort, may not have much impact on the Senate.McHenry is pushing the bill despite strong opposition from Democratic committee members, which may please his Republican colleagues, but it may also harm the chances of the bill becoming law.

Waters said that the bill is “problematic and detrimental to the US,” it “promotes a race to the bottom by creating 58 different licenses,” allowing issuers to include a variety of assets in reserves, and allowing big companies like Meta or Walmart to issue tokens.

According to Waters, Democrats are concerned about the reserve provisions in the bill, as well as the differing views on the role federal regulatory agencies should play in the issuance of stablecoins, especially the enforcement and supervision scope of the Federal Reserve over issuers licensed by national institutions.

“I urge Republicans to withdraw this extremist legislation from consideration,” Waters emphasized, despite the vote on the bill being held at 10 p.m. that night. “Why the rush? Why can’t we continue negotiations?”

Last week, Representative McHenry introduced the Clarity for LianGuaiyment Stablecoins Act, the latest version in a series of stablecoin legislative proposals he has been involved in since last year. The bill aims to eventually provide a regulatory framework for cryptocurrencies that are pegged to a fiat currency value. Stablecoins are a key element in the crypto market, providing stable tokens that investors can use to trade more volatile assets.

Thursday’s debate over the Republican stablecoin bill was highly contentious, with Republicans pushing at every procedural point and Democrats dragging their feet. The committee’s public efforts to negotiate the details of the bill highlight the ongoing stalemate in stablecoin regulation in the United States.

A White House spokesperson did not immediately respond to a request for comment. Waters stated that both the Federal Reserve and the U.S. Treasury Department currently do not support the bill.

During the debate, Massachusetts Democrat Stephen Lynch suggested delaying the vote until September, stating that Democrats did not have enough opportunity to express their thoughts. Waters supported this request and asked McHenry to consider completing the work during the August congressional recess and returning to finish it afterward.

“We have no meaningful opportunity to amend this bill… It’s embarrassing,” Lynch said. “We want to be heard, we want to have input.”

Just as the committee approved broader market structure legislation this week, including several Democrats, Jim Himes (D-Connecticut), Josh Gottheimer (D-New Jersey), and Ritchie Torres (D-New York) – all Democrats – supported the stablecoin bill.

The committee also discussed several other bills on Thursday, including a bill introduced by Representative Warren Davidson (R-Ohio) that aims to protect the right of individuals to retain self-custody wallets for their crypto assets. Despite some Democrats arguing that this would allow for the illegal abuse of crypto assets and enable people to hide assets from the government, the committee passed the bill with 29 votes to 21.

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