Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, has proposed a “grand bargain” to push through a stablecoin bill this year. During a recent oversight hearing of the Securities and Exchange Commission (SEC), Waters highlighted the urgent need for bipartisan cooperation to regulate U.S. stablecoin issuers effectively.
Waters Seeks to Conclude Two-Year Stablecoin Debate
Maxine Waters, the leading Democrat on the House Financial Services Committee, says she aims to finalize a major agreement on stablecoins by the end of this year. This could end two years of discussions in Washington about passing stablecoin laws.
Waters has been collaborating with Republican Representative Patrick McHenry, the committee’s chair, to develop laws that would regulate stablecoins. They started this work in 2022. The bill moved forward in the committee last year, which is controlled by Republicans, but it hasn’t made much progress since then.
Waters previously criticized the bill as “deeply problematic” because it allowed state regulators to authorize stablecoin issuances without needing input from the Federal Reserve.
Also read: Ripple Gears Up For Stablecoin Launch With Latest RLUSD Burns
During a committee hearing on Tuesday, Waters expressed her belief that lawmakers could agree on a bill that offers strong consumer protections and maintains solid federal oversight.
Waters said, “Mr. Chairman, 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 for hours on end to reach an agreement and have each made concessions.”
Waters added that the bill could allow for “multiple methods for issuing stablecoins,” similar to practices in other countries. However, she emphasized that the Federal Reserve should play a “central role” in this process. Additionally, for stablecoins to be “genuinely stable,” they must be supported by secure reserves, such as short-term Treasury bills.
McHenry Seeks Stablecoin Legislation, Notes Challenges
McHenry, who plans to retire at the end of the year, hopes to finalize stablecoin legislation during this Congress session, but admits it’s challenging. Waters mentioned that time is running out. Although she and McHenry have spent months working on a compromise, they haven’t yet managed to get bipartisan support. As the congressional session nears its end, the chance to pass this legislation is decreasing.
The SEC hearing, which was unusual because all five commissioners testified together, quickly turned into a debate about cryptocurrencies. McHenry and other Republicans criticized the SEC’s approach to the industry, calling it reckless.
Also read: How $170B in Stablecoins Is Changing Global Money Transfers!
They particularly criticized SEC Chair Gary Gensler’s leadership, with McHenry saying that under Gensler, the SEC has acted like a rogue agency.
He noted that the House had passed the Financial Innovation and Technology for the 21st Century Act (FIT21) with broad bipartisan support. This indicated a disagreement with the SEC’s tactics on crypto assets. Despite this, the SEC continued its aggressive enforcement.
When questioned about the SEC’s vague terms for what constitutes a crypto security, Gensler highlighted that the focus should be on economic substance rather than terminology.
