Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, is pushing for a “grand bargain” to pass a stablecoin bill this year. This move comes after Waters highlighted the urgent need for bipartisan cooperation to effectively regulate U.S. stablecoin issuers during a recent oversight hearing of the Securities and Exchange Commission (SEC).
Waters aims to conclude a two-year debate on stablecoins by finalizing a major agreement by the end of this year. She has been working closely with Republican Representative Patrick McHenry, the committee’s chair, since 2022 to develop legislation that would regulate stablecoins. While the bill made progress in the committee last year, controlled by Republicans, it has stalled since then. Waters had previously raised concerns about the bill allowing state regulators to authorize stablecoin issuances without input from the Federal Reserve.
During a recent committee hearing, Waters expressed optimism that lawmakers could reach a consensus on a bill that provides robust consumer protections and maintains strong federal oversight. She stated, “Before the end of this year, I want us to strike a grand bargain on stablecoins and other long overdue bills. Since 2022, we have been working tirelessly to reach an agreement and have each made concessions.”
Waters emphasized the importance of the Federal Reserve playing a central role in regulating stablecoins and ensuring they are backed by secure reserves, such as short-term Treasury bills. She also suggested allowing for multiple methods for issuing stablecoins, similar to practices in other countries.
On the other hand, McHenry, who plans to retire at the end of the year, acknowledges the challenges of finalizing stablecoin legislation during this Congress session. Despite months of collaboration with Waters on a compromise, bipartisan support for the bill is still lacking as the congressional session nears its end.
The recent SEC hearing, where all five commissioners testified together, quickly turned into a debate on cryptocurrencies. McHenry and other Republicans criticized the SEC’s approach to the industry, calling it reckless and accusing SEC Chair Gary Gensler of leading the agency in a rogue manner.
Despite disagreements with the SEC’s tactics on crypto assets, particularly regarding the vague terms for defining crypto securities, Gensler emphasized the importance of focusing on economic substance rather than terminology.
As the debate on stablecoin regulation continues, Waters and McHenry are working towards finding common ground to pass legislation that provides clarity and oversight in the rapidly evolving cryptocurrency landscape.