As a seasoned researcher and follower of financial markets, I find the recent developments surrounding stablecoin legislation fascinating. The latest draft by Senator Bill Hagerty, building upon the foundation laid by Patrick McHenry, presents an intriguing perspective on the role of states in regulating these digital assets.
Senator Bill Hagerty is further developing the stablecoin legislation that was proposed by House member Patrick McHenry. Hagerty has recently made public a draft discussion for the Payment Stablecoins Act of 2024, which includes some modifications to McHenry’s 2023 bill with the same title. It is important to note that McHenry will be retiring at the end of his current term.
Hagerty, a senator on the Banking Committee, admitted that the fresh bill drew inspiration from its earlier version but highlighted its major distinctions in a public announcement.
Tweaking a consensus
In contrast to the 2023 proposal, the key modification in Hagerty’s bill primarily focuses on altering the functions of the states.
In a closing part named “State-Level Regulatory Framework,” which is not present in McHenry’s bill, Hagerty outlines that smaller stablecoin issuers (those with market capitalization below $10 billion) can be governed at the state level. Larger stablecoin issuers have the option to request exemptions, enabling them to operate under state control instead of federal oversight.
In addition, the bill changes the federal agencies that supervise some issuers. Hagerty said:
“These key provisions and other technical modifications strengthen the state pathway to stablecoin issuance, establishing a tailored regulatory regime that most effectively facilitates innovation and protects consumers.”
The 2023 Stablecoin Bill successfully moved past the House Financial Services Committee with backing from both political parties, however, further talks were ongoing. In September, the committee’s top Democrat, Maxine Waters, issued a statement expressing her contentment with the bill.
“Before the end of this year, I want us to strike a grand bargain on stablecoins and other long overdue bills. Since 2022, we have been working for hours on end to reach an agreement and have each made concessions.”
Waters went on to stress the important role of the Federal Reserve Board in supervising stablecoins.
Not the lone voice on stablecoins
In 2022, Representative Hagerty proposed the Stablecoin Transparency Act during the previous Congress. This bill aimed to classify stablecoins as securities, a classification that the 2024 bill explicitly avoids. However, the Stablecoin Transparency Act failed to progress beyond the Senate Committee on Banking, Housing, and Urban Affairs.
In April 2024, Senators Cynthia Lummis and Kirsten Gillibrand presented a bill concerning digital currencies known as stablecoins.
179 pages long, the Lummis-Gillibrand Stablecoin Act is significantly longer than both McHenry’s and Hagerty’s proposals. At this moment, it remains under review by the Senate Committee on Banking, Housing, and Urban Development.
Hagerty is accepting comments on his draft bill through Nov. 1.
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2024-10-13 19:32