Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, has introduced a significant proposal aimed at pushing through a stablecoin bill this year. During a recent oversight hearing of the Securities and Exchange Commission (SEC), Waters emphasized the critical need for bipartisan cooperation to effectively regulate U.S. stablecoin issuers.
Waters Seeks to Conclude Two-Year Stablecoin Debate
Maxine Waters, a leading Democrat on the House Financial Services Committee, is determined to finalize a comprehensive agreement on stablecoins by the end of this year. This initiative aims to bring an end to two years of ongoing discussions in Washington regarding the enactment of stablecoin legislation.
Since 2022, Waters has been working closely with Republican Representative Patrick McHenry, the committee’s chair, to formulate laws that would regulate stablecoins. Although the bill advanced in the committee last year, which is controlled by Republicans, it has not seen significant progress since then.
Waters had previously criticized the bill as being “deeply problematic” due to its provision that allowed state regulators to authorize stablecoin issuances without requiring input from the Federal Reserve.
During a committee hearing on Tuesday, Waters expressed her belief that lawmakers could reach an agreement on a bill that ensures robust consumer protections and maintains stringent federal oversight.
“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 stated.
Furthermore, Waters proposed that the bill could permit “multiple methods for issuing stablecoins,” mirroring practices in other countries. However, she stressed the importance of the Federal Reserve playing a “central role” in this process. She also underlined that for stablecoins to be genuinely stable, they must be backed by secure reserves, such as short-term Treasury bills.
McHenry Seeks Stablecoin Legislation, Notes Challenges
Republican Representative Patrick McHenry, who plans to retire at the end of the year, is also eager to finalize stablecoin legislation during this congressional session. However, he acknowledges the challenges involved. Waters noted that time is running out, and despite months of collaborative effort, they have yet to secure bipartisan support. As the congressional session draws to a close, the window for passing this legislation narrows.
The SEC hearing, which was notable for featuring all five commissioners testifying together, quickly evolved into a debate about cryptocurrencies. McHenry and other Republicans criticized the SEC’s approach to the crypto industry, labeling it as reckless.
They particularly targeted SEC Chair Gary Gensler’s leadership, with McHenry accusing the SEC of acting like a rogue agency under Gensler’s direction. He pointed out that the House had passed the Financial Innovation and Technology for the 21st Century Act (FIT21) with broad bipartisan support, signaling disagreement with the SEC’s current tactics on crypto assets. Despite this, the SEC has continued its aggressive enforcement actions.
When questioned about the SEC’s vague criteria for what constitutes a crypto security, Gensler emphasized that the focus should be on economic substance rather than terminology.
