Bipartisan Push for New Stablecoin Act

On Tuesday, the US House Committee on Financial Services held a hearing to discuss the advancement of a proposed framework for stablecoin regulation

The US House Committee on Financial Services held a hearing on Tuesday to discuss the progress of a proposed framework for regulating stablecoins.

Coming from Chairman French Hill, a Republican rep from Arkansas’ 2nd Congressional District, the Committee introduced an updated Discussion Draft of the STABLE Act. The bill is a follow-up of the Clarity for Payment Stablecoins Act of 2023, which was passed during the 118th Congress.

According to Hill, the amendments aim to strengthen the operational standard for payment stablecoin issuers. It also includes regulatory clarity for handling the supervision and enforcement of the proposed stablecoin legislation.

The group also discussed the implications of introducing a Central Bank Digital Currency (CBDC) in the US. For the legislator, a digital dollar would ultimately detract from the country’s progress in regulating stablecoins. Furthermore, it would place the Federal Reserve in direct competition with the private sector.

“We’re talking about healthy competition in the marketplace with stablecoins, or we’re talking about concentrating financial power in the federal government with a CBDC,” said Hill.

The bill is notably being cosponsored by Democrats like New York Rep. Kirsten Gillibrand and Maryland Sen. Angela Alsobrooks.

Bitget Lawyer Comments on the US Congress’ Proposed Stablecoin Law and Abandonment of CBDC Plans

Hon Ng, Chief Legal Officer at Bitget, sees the proposed stablecoin regulation as a positive step that would encourage private-sector innovation and help ensure the US dollar’s continuing dominance in foreign exchange.

“The transparency and reserve requirements provisions in the bill would also be crucial for guaranteeing user protection. If passed, it would effectively integrate stablecoins into the legal fabric of the US, legitimizing them and ultimately boosting adoption among both institutional and retail players,” said Ng in an email to Blockzeit.

However, he feels that an abundance of regulation might curtail the sector’s progress, leading to issuers transferring their businesses to a more favorable regulatory climate like Switzerland, Dubai, the UK, or the EU.

“The US's prioritization of stablecoins over a CBDC aligns with Switzerland's strategy. But then again, this move might cause the US to miss out on harnessing the strategic advantages presented by state-backed digital currencies, eventually ceding ground to the EU’s digital euro and China’s digital yuan,” added Ng.

Still, he believes this move could lead to the US further strengthening stablecoins as liquidity hubs between TradFi and DeFi.