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Democrats criticized the draft legislation concerning stablecoins on Wednesday for not being as “bipartisan” as originally intended.
The bill, developed by Reps. Maxine Waters (D-Calif.) and Patrick McHenry (R-N.C.) last year, received commendation from Republicans, but faced backlash from their left-leaning colleagues who labeled it as ‘outdated.’
Starting From Scratch
The House Financial Services Committee released a draft version of the stablecoin bill on April 15, aimed at “establishing requirements for payment stablecoin issuers,” along with “research on a digital dollar.” Stablecoins are digital assets linked to fiat currencies such as dollars or euros, functioning like digital dollars that operate without a bank, relying instead on the settlement assurances provided by blockchain technology.
The currently unnamed legislation was thoroughly discussed among Waters, McHenry, and other congressional members last year, with input from the Treasury Department to formulate the first definitive regulations tailored to a significant segment of the crypto sector.
However, upon reviewing the finalized first draft during a committee hearing on Wednesday, Waters remarked that the bill seemed entirely different from what had been previously discussed.
“Mr. McHenry concerned me somewhat when he indicated that the members on his side of the aisle had developed an entirely new bill,” Waters stated. “The posted bill in no way reflects … negotiations between the two of us … I believe we’re starting from scratch.”
Stephen Lynch (D-Mass.), the leading Democrat on the digital assets subcommittee, raised questions about the fundamental purpose of stablecoins, pointing out that they are more commonly utilized for “speculative cryptocurrency trading and investments” rather than for actual transactions.
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The Optimistic View
McHenry, who is the committee chair, disagreed with this perspective, asserting that the bill is significant “both internationally and domestically.”
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Rep. French Hill (R-Ark.) also believed that the bill was more bipartisan than it was credited for, referring to it as “Maxine McHenry.”
Both McHenry and Waters concurred, however, that much has transpired since the last discussions on the bill occurred – including the downfall of FTX. They also acknowledged that prompt action was necessary to revise the bill and ensure that the United States keeps pace with the global landscape.
The proposed legislation would prohibit any entity from issuing stablecoins except for subsidiaries of insured depository institutions or licensed non-bank entities.
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