The next draft of a stablecoin bill gets a hearing tomorrow when the House Financial Services Committee holds a markup for the STABLE Act.

Why it matters: Issuers — from banks and fintechs to the state of Wyoming — are already lining up new offerings for dollar-backed stablecoins, a class of crypto asset responsible for over $15 trillion in transaction volume last year.

Sponsored by House Financial Services Chair French Hill (R-Ark.), Digital Assets Subcommittee Chair Bryan Steil (R-Wis.) and House Whip Tom Emmer (R.-Minn), the bill (H.R. 2392) signals strong support from the lower chamber's leadership.

• It has 14 sponsors, just three of whom are Democrats so far.

Friction point: A Democratic staffer tells Axios that ranking member Maxine Waters (D-Calif.) does not plan to support the STABLE Act because she wants guarantees that administration members could not profit off a stablecoin.

Context: World Liberty Financial, a company whose revenues reportedly flow largely to the Trump Organization, announced plans last week to launch USD1, a stablecoin designed for institutions.

• It's already causing problems.

State of play: The Senate has its own stablecoin legislation, moving the GENIUS Act to the floor of the chamber in March.

• One major difference in the STABLE Act from the Senate bill is that it requires states to meet the same standards as the Federally regulated stablecoin.
• The GENIUS Act, by contrast, contemplates a tiered system, where a state can regulate smaller stablecoins in a "substantially similar" manner to the feds.
• Emmer has expressed skepticism about requiring stablecoin issuers to meet Bank Secrecy Act obligations.

What we're watching: One of the chambers needs to vote on one of these bills. Industry observers are watching for any amendments tomorrow that would bring the STABLE Act closer to the GENIUS Act.

What else is in STABLE Act

The House bill would assign a bank's existing regulator to any bank that issued a stablecoin.

• So credit unions would be supervised by the National Credit Union Administration and nonbank stablecoins would be supervised by the Comptroller of the Currency.
• It stipulates applications for a license to issue a stablecoin should receive a yes or no within about 120 days, and existing stablecoins have two years to get registered.
• Algorithmic stablecoins, such as Terra (UST) would be a no-go for two years.

Also forbidden would be yield-bearing stablecoins.

• In general, stablecoin issuers make profits by keeping the interest earned on their reserves. Some smaller stablecoins share that yield with holders.
• But doing so basically makes stablecoins into de facto narrow banks, which is not a banking model the U.S. has supported so far.

What's next: The House markup session kicks off Wednesday at 10am ET.

Kentucky just dropped its case against Coinbase over its offering to pass on yield from staking onto its customers.

Why it matters: This could be a sign of a trend. Vermont and South Carolina have already withdrawn their lawsuits, meaning three of the 10 state cases on the issue have officially been withdrawn following the SEC's decision to drop its own.

How it works: Staking is the act of crypto holders posting an asset that validators must pledge to clear transactions in a proof-of-stake system.

• In return for that posting, stakers earn yield in the form of new emissions of the asset.

Zoom out: The SEC's 2023 lawsuit took issue with Coinbase for its staking services, arguing that its passing on earned yield to customers constituted an "investment contract," which required registration with the agency.

• 10 states followed its lead and sued Coinbase over staking: Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin.

The big picture: Staking has been one of the most reliable ways for crypto investors to increase their digital asset holdings in a low-risk way.

• The most widely discussed source of crypto yield has been on the second-largest blockchain: Ethereum.

Flashback: Before moving to a proof-of-stake model, Ethereum had been criticized for using the electricity hungry proof-of-work model, the same model that draws criticism for Bitcoin.

• With The Merge in 2022, Ethereum's use of electricity plummeted. Instead, it was secured by staked ether (ETH), which could be slashed if a validator failed to meet its commitments to the network.

By the numbers: Of the total supply of ether, about 28% is committed to securing the network. (Ethereum is having a tough year.)

Two of President Trump's sons are investing in a new bitcoin mining venture.

Why it matters: The deal further expands the first family's business interests in the crypto industry, even as President Trump continues to push favorable digital currency policies.

Driving the news: Eric Trump and Donald Trump Jr. have inked a deal with publicly traded bitcoin mining company Hut 8 to create the new company, American Bitcoin.

• Hut 8 is contributing the computing infrastructure to power the mining operation and will own 80% of the new venture.
• The rest of the company will be owned by an entity formed in February, which counts Eric Trump and Donald Trump Jr. among its investors. That entity was merged into and renamed as American Bitcoin.

Eric Trump, who was described as a co-founder of American Bitcoin, will serve as chief strategy officer.

Zoom out: American Bitcoin is aiming to go public, and may collaborate with World Liberty Financial, a decentralized-finance project created recently by the Trump family, Eric Trump told the Wall Street Journal.

• The company plans not only to mine new bitcoin, but also to create what it called a "strategic reserve," which would be separate from the U.S. strategic crypto reserve that President Trump established a March executive order.

Go deeper

🔭 The FDIC followed the OCC and ended its requirement for the preapproval of crypto-related activities. (Axios)

🌌 Galaxy agreed to a $200 million settlement with New York over its promotion of LUNA. (Axios)

📝 Sen. Ted Cruz (R-Texas) has his eye on more Biden-era crypto guidance. (X)

🦃 President Trump pardoned the founders of BitMEX over Bank Secrecy Act violations, among others. (Axios)

Oxbow announced what it hopes to be a compliant way of privately transacting to Ethereum.

Why it matters: This is an effort to strike a balance between Tornado Cash and the Bank Secrecy Act.

Flashback: We wrote about this project in fall 2023.

How it works: On Oxbow, users get an identity check going in to the privacy pools but, if they pass, no one will know when they withdraw or what wallet they withdrew to.

• The idea is if crooks can't get in, then crooks can't get out, either.