House Republicans are still trying to push ahead with a bill to regulate stablecoins and their issuers after hitting a snag in the form of sharp criticisms of the bill by Democrats, who see the bill as too favorable to the crypto industry.
In his opening statement, Rep. Patrick McHenry (R-NC), the chairman of the House Financial Services Committee and a strong supporter of the bill, said he was “disappointed” that an agreement with Democrats on the committee remained out of reach.
He blamed the debacle on the White House, which he accused of not being willing to find middle ground on certain provisions of the bill, known as the “Clarity for Payment Stablecoins Act of 2023.”
“A bipartisan deal was within reach,” said McHenry. “It was the White House’s unwillingness to compromise that has once again brought negotiations to a halt.”
McHenry did not specify which specific provisions were the points of disagreement with President Joe Biden’s administration, but insisted that negotiations were ongoing into the prior evening. Spokespersons for McHenry and the White House have not yet returned Decrypt’s request for a comment.
For their part, Democrats on the committee criticized Republicans for what they say is a rush to pass the bill.
Ranking member Maxine Waters (D-CA) called the bill “deeply problematic,” over what she said was its lack of meaningful oversight for stablecoin issuers, adding that key regulators like the Federal Reserve and Treasury Department did not support the bill. Spokespersons for the Fed and Treasury did not immediately return Decrypt’s requests for comment on Waters’ statement.
Waters said that broad portions of the bill were bipartisan, and left the door open for further negotiations. However, she chided McHenry for encouraging a “race to the bottom” with the bill in its current form, particularly around sections that she said failed to provide clarity on the reserves supporting stablecoins’ peg to the U.S. dollar.
“Important legislation takes time, but the chair is impatient, and has decided to abruptly end negotiations and move forward with a bill that is deeply problematic,” said Waters.
A stablecoin is a digital token that draws its value from its peg to a fiat currency or commodity to keep its volatility in check. This peg is supported by reserves that could come in the form of cash or real-world assets.
These clashes follow similar disagreements between lawmakers over a parallel digital asset regulation bill a day earlier. In that hearing, Democrats ridiculed the proposal—called the Financial Innovation and Technology (FIT) for the 21st Century Act—as being too favorable to big crypto companies and for lacking protections for consumers.
The crypto industry has broadly offered strong support for both bills, and executives previously testified in June that its passage was necessary to ensure that the U.S. remains hospitable to crypto innovation—or risk more companies moving offshore.