Republican leadership in the House and Senate is signaling that they plan to move quickly to pass stablecoin legislation with their unified control of Congress. However, their optimism may be masking some of the challenges of legislating, even with control of the House and Senate.
The current House and Senate Republican proposals for stablecoin legislation are relatively similar, which is a good first step toward passage. Both bills would split oversight of stablecoin issuers between the Federal Reserve, the Office of the Comptroller of the Currency, and state regulators depending on the entity issuing the stablecoin and its market capitalization. The bills also would create similar rules around mandating 1-to-1 reserves consisting of safe and liquid assets and imposing capital, liquidity, and risk management requirements.
The first sign of progress toward passage to watch for will be hearings by either the House Financial Services Committee or the Senate Banking, Housing, and Urban Affairs Committee. What will be especially important to watch for in these hearings, particularly in the Senate, is what level of Democratic support exists for the bill. The House draft was discussed as part of a hearing held by the House Financial Services Committee Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence in early February but has not been part of a full committee hearing yet, which will likely happen before a markup of the bill. The top Democrat on the committee, Rep. Maxine Waters (D-Calif.), criticized the Republicans’ draft during the hearing, arguing it was “light on consumer protections” and pushing for her proposal that had been negotiated with former HFSC Chair Patrick McHenry (R-N.C.) instead.
While Democratic votes are not necessary in the House or committee markups to advance the drafts, at least seven Democrats must vote in favor of the legislation for it to pass on the Senate floor. Senator Kirsten Gillibrand (D-N.Y.) is already a sponsor of the measure and urged her colleagues to join her effort in a recent op-ed published by CoinDesk. Still, no other Democrats have officially signed on in the upper chamber.
The possible list of Senate Democrats who may back the measure starts with the 12 who voted to disapprove the Securities and Exchange Commission’s Staff Accounting Bulletin 121 last year. This list includes Gillibrand and, notably, Senate Minority Leader Chuck Schumer (D-N.Y.), but also consists of some members who lost their re-election bids, like former Senators Jon Tester (D-Mont.) and Bob Casey (D-Pa.). Additionally, voting to support a resolution is less of a commitment than voting for a law to pass. This is not to say the votes may not be there, but that the comparison between the two votes is not perfect, and a vote against SAB 121 should not be automatically interpreted as a sign that the stablecoin bill will pass easily in the Senate.
Outside of finding enough bipartisan support in the Senate, the biggest challenge, and arguably the toughest obstacle to hopes for quick passage, is finding floor time in both chambers. In the current Congress, floor time in the House and Senate is at a premium. As much of a focus as this measure is for some Republican leaders, there are larger priorities, including addressing government funding, the debt limit, and tax legislation. The Senate is also spending significant floor time on confirming President Donald Trump’s nominees. These processes are time-intensive and will likely remain ahead of passing stablecoin legislation for at least the next several months.
These competing bills also demand lawmakers’ attention and will likely distract from the stablecoin bill. The fastest Congress could likely pass stablecoin legislation would be by the end of July. However, a more realistic timeline is likely for the measure to pass in the fall or winter, assuming all the necessary hurdles have been cleared.
Republicans’ optimism about passing a stablecoin bill and other crypto-focused bills is likely well-founded. Still, given the hurdles facing their efforts, expectations regarding the timeline that committee leaders are pushing should be tempered.