House Financial Services Committee fails to reach agreement on stablecoin legislation due to disagreements.
Key Points
- HFSC couldn’t agree on stablecoin legislation due to Democrat disagreements and blame on the White House.
- The Clarity for Payment Stablecoins Act aims to give Fed authority over issuers, with state-level regulation and extra requirements.
- McHenry blames White House, Waters accuses him of rushing a flawed bill.
- FIN21 bill on crypto regulations approved with bipartisan support, clarifying regulators’ authority and crypto classification in securities transactions.
The House Financial Services Committee (HFSC) was unable to come to an agreement on stablecoin legislation on Thursday, citing various disagreements among Democrats regarding the existing text of the bill.
Committee Chair Patrick McHenry (R-NC) blamed the White House for hindering the progress of the bill, while Democrats accused Republicans of rushing incomplete legislation.
Here is Chair McHenry explaining what he’s doing with stablecoin legislation today and why.
The blocker is the Biden Administration. There is broad bipartisan support for the legislation in the House. It’s been written in good faith on an important issue. What a shame. pic.twitter.com/hTGYr8XOGs
— Zach Wong 🧙♀️ (@mud2monarch) July 27, 2023
No Compromise For Stablecoin Bill
Titled the Clarity for Payment Stablecoins Act of 2023, the bill aims to grant the Federal Reserve the authority to impose requirements on stablecoin issuers, while still allowing state-level regulators to regulate the payment stablecoin industry and outlining additional requirements.
After 15 months of negotiations, McHenry claimed that the committee was close to reaching a bipartisan agreement with only a few minor provisions left unresolved.
McHenry stated, “It was the White House’s unwillingness to compromise that has once again brought negotiations to a halt.” However, he did not specify which elements of the bill the Biden administration objected to.
On the other hand, Maxine Waters (D-CA), the ranking member of the committee, accused McHenry of impatience and pushing forward a deeply flawed bill that lacked support from the Treasury Department and Federal Reserve. Federal Reserve chairman Jerome Powell has previously emphasized the central bank’s role in the industry as the ultimate source of credibility on money.
Waters argued that the bill would grant states excessive authority to expand the number of eligible reserve assets for backing stablecoins, posing risks to token holders. She also expressed concerns about tech giants being able to issue their own stablecoins, similar to Facebook’s failed stablecoin project, Diem.
“We too would like a real bipartisan bill,” said Waters in her opening statement. “I don’t know what the rush is. Why the rush at this particular time?”
Success of FIN21
While the stablecoin bill faced hurdles and disagreements, the Financial Innovation and Technology for the 21st Century Act proposed on Wednesday managed to secure bipartisan approval. All Republicans on the committee voted in favor, along with six Democrats.
The FIN21 bill outlines which market regulators should have authority over various cryptocurrencies and clarifies that a crypto asset may be issued in a securities transaction without being classified as a security itself.
Despite criticism from crypto opponent Brad Sherman (D-CA), Congressman Ritchie Torres (D-NY) acknowledged that the bill represented progress and improvement compared to the existing regulations.
“This legislation is far from perfect, but it represents a good-faith attempt to create clarity where none exists,” said Torres. “I will not let perfect be the enemy of good.”
