Negotiations on a comprehensive framework for payment stablecoins in the United States have reached a standstill. The House Financial Services Committee Chair, Patrick McHenry, announced the impasse, attributing it to the White House’s opposition. McHenry, a Republican from North Carolina, praised his Democratic counterpart on the committee, Rep. Maxine Waters, for her work on the bill. However, he expressed disappointment that a bipartisan deal, which he claimed was within reach, had been derailed due to the White House’s unwillingness to compromise.
Differing views on the stablecoin bill
The stalled talks have led to a blame game between the Republicans and Democrats. While McHenry accused the White House of being unyielding, Waters criticized McHenry for being impatient and halting the talks. Waters, a Democrat from California, called the current version of the bill “deeply problematic and bad for America.” She raised concerns about a provision that allows state regulators to approve stablecoin issuances without Federal Reserve input and the potential for large corporations like Amazon and Facebook to issue their own digital currencies if the bill, as currently written, became law.
The stalemate over the stablecoin legislation comes at a time when the finance-focused lawmakers advanced three bills on crypto issues to a vote in the full House of Representatives. This marked the first time they advanced laws fully dedicated to the topic. The inability to reach a bipartisan agreement on the stablecoin legislation could potentially harm its chances of becoming law, as any U.S. stablecoin bill would also need to win support in the Democrat-led Senate.
Reactions from the Federal Reserve and the Treasury Department
Waters stated that neither the Federal Reserve nor the U.S. Treasury Department support the bill as it stands. She also mentioned that the bill does not have the support of those who initiated the stablecoin talks last year. This lack of support from key financial institutions and regulators could further complicate the path forward for the stablecoin legislation.
Despite the current impasse, the need for a regulatory framework for stablecoins in the US remains. Stablecoins, which are cryptocurrencies tied to the value of a fiat currency, play a key role in the crypto markets. They provide steady tokens with which investors can trade in and out of more volatile assets. As such, the outcome of these negotiations and the eventual legislation that emerges will have significant implications for the future of stablecoins and the broader crypto market in the US.