Stablecoin legislation deal floated in House
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House Financial Services Committee ranking member Rep. Maxine Waters (D-CA) and committee chairman Rep. Patrick McHenry (R-NC) during a hearing. (Photo: Chip Somodevilla/Getty Images
Proponents of stablecoin legislation have new reason for hope that something could get done before year-end, as Rep. Maxine Waters (D-Calif.) has put a deal on the table for House financial services Chairman Patrick McHenry (R-NC), a Hill staffer tells Axios.
Why it matters: Stablecoin legislation has been thought to be the easiest starting point for updating U.S. laws to deal with some sort of cryptocurrency.
State of play: McHenry's office has not replied to a request for comment, and it's unclear whether he or House Speaker Mike Johnson (R-La.), will sign off on the proposal.
- If a deal were to get done, the most likely vehicle to move it would be the National Defense Authorization Act, which is must-pass legislation for the year-end.
- It's likely to come as a package that includes other issues like deposit insurance reform and perhaps legislation that would permit legal cannabis companies to access the banking system.
Between the lines: McHenry, billed often as one of crypto's most powerful allies, declined to seek re-election, so his time in office is coming to a close.
- Democrats, Axios was told, would rather do this deal now so they don't have to start over with a new Republican atop the financial services committee.
Zoom out: Stablecoin legislation has been viewed as very close for years now, and yet nothing has gotten to a floor vote.
- Prior versions strongly favored stablecoins backed by deposits of dollars and other highly liquid instruments. They also strongly discouraged algorithmic ones. That's unlikely to have changed.
We're told, however, that a lot of other details and areas of focus have moved since then.
- One point of back-and-forth has been around state banks issuing stablecoins.
The big picture: Stablecoins — cryptocurrencies that are pegged to the U.S. dollar — have arguably become the first killer app of blockchains, with $172 billion in market cap and trillions in global volume.
Zoom in: While the main use case has been and continues to be trading other cryptocurrencies, stablecoins are being used more and more in other ways as well.
- A survey last spring of 2,541 crypto users in Nigeria, Indonesia, Turkey, Brazil and India, by Castle Island Ventures and Brevan Howard Digital and sponsored by Visa found a significant number of people also used stablecoins as a way to access dollars, yield generation and to make transactions.
Reality check: Legislative action in the U.S. is contingent on the election and the political calculus of leadership.
- The most likely outcome is that nothing happens, but, at the least, each party's financial services leader appears to have strong motivation to cut a deal now.
