Draft legislation regarding stablecoins has been criticized by Democrats for not being as “bipartisan” as intended. The bill was created last year by Representatives Maxine Waters and Patrick McHenry and was praised by Republicans but criticized by their left-wing opponents as outdated. A draft version of the legislation was published by the House Financial Services Committee in April. It aims to “provide requirements for payment stablecoin issuers” along with “research on a digital dollar”. The legislation had been discussed at length between Waters, McHenry and other members of Congress during which time it was intended to create the first concrete laws tailored to a significant portion of the crypto industry. However, Democrats now claim that the proposed legislation is not representative of what had been discussed.
Stablecoins are digital assets that use blockchain to provide settlement assurances, acting like digital dollars that do not require a bank. The proposed legislation would disallow any business from issuing stablecoins unless it was a subsidiary of an insured depository institution or licensed non-bank entity. House Financial Services Committee Chair Patrick McHenry supports the proposal, maintaining that the legislation is important “both internationally and domestically”. McHenry and Waters have agreed, however, that much has happened since discussions on the bill took place, including the collapse of FTX, and both believe that updated legislation is urgently required to ensure the US remains at the forefront of the industry. Senior Democrat on the digital assets subcommittee, Stephen Lynch, argued that stablecoins were mostly used in speculative cryptocurrency trading and investments rather than for payments. The proposed legislation is yet to be named.
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