Lawmaker: Stablecoin Bill Could Bypass Regulators

A member of the House Financial Services Committee said lawmakers could overrule U.S. regulators who want stablecoins to be governed solely by banks.

As Coindesk reported Monday (July 18), Democrats on the committee have been working on rules for stablecoins that might be as stringent as the Treasury Department and financial regulators had hoped.

The bill could create a path for nonbank firms to become government-approved stablecoin issuers, Rep. Jim Himes, D-Conn., a senior member of the committee and one of its subcommittee chairmen but who isn’t working directly on the legislation, told Coindesk.

See also: The Case for Stablecoins: A Better, Safer, More Innovative Payments Solution Than Bitcoin

“Apparently, we’ll have options for both banks and non banks,” Himes said, adding that Chairwoman Maxine Waters, D-Calif., and the top Republican on the committee, Rep. Patrick McHenry, R-N.C., have been putting together on a narrow, stablecoin-only bill, and which could create “standards for reserves” for more than one kind of issuer.

Coindesk noted that concession could clash with a 2021 report by the President’s Working Group on Financial Markets, which recommended tokens only be issued by “insured depository institutions, which are subject to appropriate supervision and regulation.”

While the details of the legislation may not match one of the central requests from regulators, the working group also asked that “Congress act promptly to enact legislation” — an apparent aim of the committee leaders.

“There is broad agreement that legislation is necessary,” McHenry told Coindesk, adding that the best move was to proceed with a bipartisan approach, as with the crypto bill the congressman introduced late last year.

Related: Global Regulators Call for Interoperable Stablecoins, CBDCs

Last week, the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO) published their guidance on the application of financial market infrastructure rules to stablecoins.

The guidance’s key message is that when a stablecoin reaches a point to be considered of significant importance, it must comply with the same safeguard rules as any other traditional form of payments. They say their work is a step forward in applying “same risk, same regulation” to stablecoins, and it extends the global standards for payments, clearing and settlement systems to cover the key stablecoins.

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