U.S. Takes Big Leap Towards Crypto Regulation

The Republican-led House Financial Services Committee has revealed a revised draft for a stablecoin oversight legislation, incorporating some viewpoints from Democratic members. Still a work-in-progress, this draft signals the possibility of bipartisan negotiation on crypto regulation. The latest version, significantly shortened, integrates positions from both parties and additional Republican committee members' suggestions.

This bill would direct the Federal Reserve to establish standards for stablecoin issuance, allowing state regulators to supervise token issuers. It offers additional power to the Fed, including the authority to intervene in emergencies against state-regulated issuers. It also allows states to transfer their supervisory responsibilities to the federal watchdog.

Committee chairman, Rep. Patrick McHenry (R-N.C.), has prioritized stablecoin legislation since before his chairmanship. Despite Democrats' accusations of Republican-dominated redrafting, they have released their own version. The bill's narrow scope and past bipartisan backing remain its strengths, though Democrats' reaction to the newest draft is unknown.

If approved by Congress, this bill would introduce the first U.S. regulations for stablecoins, crypto tokens tied to stable assets like the dollar. This draft has omitted an earlier section calling for research into a digital dollar, a concept facing Republican criticism, though the Federal Reserve remains neutral on the idea of a central bank digital currency (CBDC) for the U.S.