Democrat Rep. Maxine Waters Proposes New Framework for Stablecoin Regulation
Representative Maxine Waters, a prominent Democrat on the House Financial Services Committee, has unveiled a discussion draft aimed at controlling stablecoins. This draft, as reported by Punchbowl, seeks to establish stringent oversight by involving federal entities like the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corporation, alongside state regulators.
Waters' proposal stipulates that registered stablecoin issuers must adhere to specific reporting requirements. Moreover, they are mandated to maintain reserves that match their issued stablecoins on at least a one-to-one basis. This measure aims to ensure that stablecoins maintain their pegged value, thereby safeguarding consumer trust and economic stability.
The journey towards this regulatory framework has been collaborative yet contentious. Waters had previously worked with Patrick McHenry, the former Republican chair of the House Financial Services Committee, since 2022 to draft rules for stablecoins. However, the bill that emerged from the then-Republican-led committee was met with criticism from Waters, who labeled it "deeply problematic" due to its allowance for state regulators to approve stablecoin issuances without Federal Reserve involvement.
Bipartisan Efforts in Stablecoin Regulation
Despite past disagreements, the draft by Waters reflects ongoing discussions with McHenry, suggesting a bipartisan approach to this complex issue. This is further evidenced by recent actions from the Republican side, where House Financial Services Committee Chair French Hill, along with Representative Bryan Steil, introduced their own draft legislation last week. Their approach slightly diverges by empowering the Office of the Comptroller of the Currency to supervise nonbank payment stablecoin issuers, bypassing a direct federal path through the Federal Reserve.
Waters has also expressed concerns about the broader implications of cryptocurrencies. In a related statement, she highlighted potential national security risks posed by certain cryptocurrencies, notably referring to Donald Trump’s memecoin as a significant concern.
The legislative push for stablecoin regulation isn't confined to the House. In the Senate, Senator Bill Hagerty from Tennessee has introduced a bill titled "Guiding and Establishing National Innovation for US Stablecoins." This legislative move was strategically timed just before a press conference where lawmakers announced the formation of a cross-committee working group dedicated to crafting rules for cryptocurrencies and stablecoins, involving key figures from various congressional committees.