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Maxine Waters says Impending Stablecoin Legislation Promises Enhanced Protections but to Whom?

Last Updated April 25, 2024 10:39 AM
Teuta Franjkovic
Last Updated April 25, 2024 10:39 AM
By Teuta Franjkovic
Verified by Peter Henn

ter Key Takeaways

  • Representative Maxine Waters has expressed optimism about the swift completion of a stablecoin bill.
  • There has been a ramp-up in legislative efforts, with both the Senate and House showing increased activity.
  • The proposed stablecoin bill aims to enhance reliability by ensuring that reserve assets fully back stablecoins.
  • Despite this, there is still uncertainty about the bill’s impact.

US House Representative Maxine Waters says  that the completion of a stablecoin bill is imminent.

Recent progress on stablecoin legislation has bolstered expectations that America might enact a new law before this year’s elections. However, there are still unknowns about what the impact of the bill might be.

Waters Optimistic About Imminent Stablecoin Bill 

The senior Democrat on the House Financial Services Committee expressed optimism  about the legislation’s progress. She said: “We are on our way to getting a stablecoin bill in the short run.”

Waters has previously criticized an earlier draft of the bill as problematic and detrimental to American interests. She said the bill focused on protecting investors and ensured stablecoins were adequately backed by assets.

Waters called a previous version of the stablecoin bill “deeply problematic and bad for America”.

She stated :

“It’s about making sure investors and that the people are protected. We have to ensure that they have those assets to back up stablecoins.”

The push for a new stablecoin law  has gained significant momentum, raising hopes that legislation could be passed before this year’s elections—a prospect that was initially viewed as unlikely. Recent weeks have seen increased activity from both the Senate and the House on this front. According to Waters, the likes of the Federal Reserve, Treasury Department, and White House have all contributed to the bill.

Furthermore, after 22 months of negotiations, Waters and House Financial Services Committee Chairman Patrick McHenry (R-N.C.) have intensified their efforts by meeting with Senate Majority Leader Chuck Schumer. They aim to speed things up by linking the bill to the next month’s Federal Aviation Administration reauthorization. This move could help ensure the bill’s passage by attaching it to legislation that must be approved.

House Readies for Vote Amid Broader Legislative Push

Last week, the Senate saw significant legislative action as Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) introduced a new bill targeting stablecoins. This bill proposes significant regulations, including a ban on algorithmic stablecoins and a requirement for issuers to ensure their tokens are fully backed by reserve assets.

In a related development, Representative Maxine Waters mentioned  that she has been in discussions about stablecoins with Senate Banking Chairman Sherrod Brown, who earlier expressed openness to advancing stablecoin legislation. Additionally, there’s potential for this legislation pair with a marijuana banking bill. However, this could face challenges, particularly from Republican leader Mitch McConnell. Despite these potential hurdles, Waters remains optimistic about overcoming any resistance.

On the House side, Financial Services Committee Chairman Patrick McHenry indicated that the stablecoin bill has been largely finalized in the Republican-controlled House and is merely awaiting a scheduled floor vote.

Balancing Modern Financial Infrastructure and Dollar Dominance

The proposed stablecoin legislation comes at a key time for the digital currencies. Just as the Dodd-Frank Act  aimed to bolster financial stability and protect consumers in the wake of the Lehman Brothers collapse, the stablecoin bill seeks to modernize and secure the financial infrastructure around digital currencies.

The crux of the debate surrounding the stablecoin legislation hinges on its potential to strengthen the American financial system and to promote the dollar as a dominant force in the digital economy. Although could make transactions quicker, cheaper, and more efficient for American businesses and families, critics argue that it may not inherently support the broader cryptocurrency market. Instead, the bill could primarily enhance the position of the dollar, raising questions about the ultimate goals of such legislation.

Is the primary aim of the stablecoin bill to safeguard the financial system and consumers? Is it to reinforce the traditional financial hegemony of the US dollar? These questions touches on the broader implications of what digital currencies are there for. Should they fit in with the current set up or shake things up?

As Washington moves forward, how the law aligns with the interests of various stakeholders—including the burgeoning crypto sector and traditional financial entities—will be pivotal in shaping the future of financial transactions.

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