House Set to Examine the Future of US Stablecoins

The House Financial Services Committee is due to meet Wednesday (April 19) for a hearing on that topic, and has also published draft legislation for a stablecoin bill that could impose a moratorium on the digital currency.

“During the 2-year period beginning on the date of enactment of this Act, it shall be unlawful to issue, create, or originate an endogenously collateralized stablecoin not in existence on the date of enactment of this Act,” the text of the bill reads.

The moratorium on stablecoins would last until the government completes a study on the topic. The legislation also calls for a study looking at the impact of a Federal Reserve-issued central bank digital currency (CBDC).

In an interview with PYMNTS’ Karen Webster last year, Rep. Patrick McHenry — who now heads the committee — said he wanted to focus on stablecoins if Republicans retook the House.

“What we now have is a complicated policy,” said McHenry, a North Carolina Republican, “and it’s a complicated legislative text. … The nature of legislative compromise does not often create something of beauty. It creates something of practical consequence. And this is what I’m going for.”

At a high level, he told Webster, the country needs stablecoin. He argued coins like USDT and USDC have an edge over bitcoin and other crypto, which are volatile and far from stable.

“But we don’t have a federal regulatory ‘form’ around it,” McHenry said, “or insight into the assets acting as backing.”

The proposed moratorium follows legislation introduced last year by former Sen. Pat Toomey, a Pennsylvania Republican, that would have banned algorithmic stablecoins.

Witnesses at Wednesday’s hearing will include Dante Disparte, chief strategy officer at Circle Internet Financial, which issues the USDC stablecoin, and Columbia University business professor Austin Campbell.

Also set to testify are Adrienne Harris, superintendent of the New York State Department of Financial Services, and Jake Chervinsky, policy chief for the Blockchain Association.

Against the backdrop of this hearing is the question — posed by PYMNTS last month — of whether the arrival of the new FedNow payments system would make cryptocurrencies and stablecoins obsolete.

“The growth of crypto assets has revealed a demand for a faster and more inclusive financial system with a real-time payment system and circulating digital money. … This vision has not been realized,” a recent White House paper on cryptocurrency reads.

The U.S. government believes FedNow will step in to make good on crypto’s promises, arguing that once it launches, the benefits of circulating digital money will be minimal.

“As U.S.-based crypto firms increasingly look to establish operations abroad, the future of the digital asset industry in America looks increasingly clouded,” PYMNTS wrote.