Stablecoins Bill considerations
July 27, 2022 - Comments by Dina Ellis
1. The House goes out of session this week for the August recess so nothing can move in the House until Sept. The closer we get to the elections, the harder it is to get anything done.
2. The key Senate player haven’t been involved in these negotiations.
Waters, McHenry 'close' on stablecoin framework legislation
July 27, 2022 – 12:33 p.m. By Caitlin Reilly, CQ
House Financial Services Chairwoman Maxine Waters and ranking Republican Patrick T. McHenry said they’re close to reaching a deal on legislation to establish rules of the road for stablecoins.
Waters, D-Calif., and McHenry, R-N.C., said Wednesday at a committee markup that they plan to continue negotiations over the August recess and hope to unveil a bipartisan bill in September. The President’s Working Group on Financial Markets called on Congress in November to pass legislation establishing a regulatory framework to govern dollar-pegged stablecoins.
“Although the ranking member, Secretary Yellen and I have made considerable progress towards an agreement on the legislation, we are unfortunately not there yet,” Waters said, referring to Treasury Secretary Janet L. Yellen. “It's critical that we continue moving the ball forward on this, so we can have a regulatory framework that protects consumers while allowing for responsible innovation.”
Waters added the legislation would also direct the Federal Reserve to research and develop a federally-backed digital dollar to ensure the U.S. remains competitive globally.
McHenry said the two were looking to existing state regulation of dollar-pegged stablecoins, most notably New York’s.
“I think the important thing to say is that we're close. We're not there yet, but we are close,” McHenry said. “We want to make sure that this bill, that this law is technically proficient and a workable law. We don’t want a dead letter as soon as we pass the thing. We want a workable law.”
Neither Waters nor McHenry revealed further details about the bill, such as what regulation of stablecoins would entail.
The President’s Working Group in its report last year called for limiting the issuing of stablecoins to federally-insured depository institutions to prevent the risk of runs and other threats to financial stability. The cryptocurrency industry opposes limiting stablecoins to banks and has proposed other safeguards, including requiring stablecoins to be fully backed by cash and cash equivalents.
The Chamber of Digital Commerce, a cryptocurrency advocacy group, said Tuesday in a memo to its members that it has been involved in negotiations around the bill.
The Waters-McHenry bill, if it materializes, would be the most high-profile bipartisan bill to address governance of stablecoins.
A broader cryptocurrency package (S 4356) by Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., in June would also address stablecoin governance by requiring full backing of the digital assets by reserves, and mandatory disclosures. The bill would also allow for special charters to be created for stablecoin issuers under state and federal law.
Sen. Patrick J. Toomey, R-Pa., Senate Banking ranking Republican, released a discussion draft for stablecoin governance in April. The legislation would provide three pathways to regulation for stablecoin issuers — a traditional bank charter, state licenses for money transmitters and a special charter that would be established by the Office of the Comptroller of the Currency.
Toomey’s Democratic counterpart, Banking Chairman Sherrod Brown of Ohio in May dismissed the Republican’s proposal as too friendly to the industry.
