The House Financial Services Committee (HFSC) failed to reach an agreement for stablecoin legislation on Thursday due to a number of disagreements Democrats had with its existing text.
Committee Chair Patrick McHenry (R-NC) blamed the White House for holding up the bill, while Democrats alleged that Republicans were attempting to rush incomplete legislation.
The bill, titled the Clarity for Payment Stablecoins Act of 2023, would allow the Federal Reserve to write requirements for stablecoin issuers, but still preserve the authority of state-level payment stablecoin regulators while outlining other requirements.
After 15 months of negotiations, McHenry claimed the committee was “closer than we’d ever been” to a bipartisan deal aside from a few “small provisions.”
“It was the White House’s unwillingness to compromise that has once again brought negotiations to a halt,” he said. He did not specify which elements of the bill the Biden administration had objected to.
The agency’s ranking member, Maxine Waters (D-CA), blamed McHenry’s “impatience” for pushing forward a “deeply flawed” bill, which she said lacked support from both the Treasury Department and Federal Reserve. Previously, Federal Reserve chairman Jerome Powell has emphasized that the central bank ought to have a role within the industry as the ultimate source of credibility on money.
Waters claimed the bill would give states too much authority to expand the number of eligible reserve assets for backing stablecoins, creating risks for token holders. Furthermore, she said it would allow tech giants to issue their own stablecoins – a threat reminiscent of Facebook’s now-defunct stablecoin project, Diem.
“We too would like a real bi-partisan bill,” said Waters in her opening statement on Thursday. “I don’t know what the rush is. Why the rush at this particular time?”
Unlike the stablecoin bill, 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 its favor, alongside 6 Democrats.
The bill outlines which market regulators should have authority over what cryptocurrencies, and clarifies that a crypto asset may be issued in a securities transaction without being a security itself.
Though crypto critics like Brad Sherman (D-CA) thought the bill was too friendly to the crypto industry, Congressman Ritchie Torres (D-NY) acknowledged that it was still leagues ahead of the regulations in place today.
“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.”