Bloomberg News
WASHINGTON — House Republicans couldn’t quickly pass their stablecoin bill out of committee as Democratic lawmakers exhaustively introduced amendments to address fears that President Donald Trump’s cryptocurrency ambitions pose a significant conflict of interest.
No votes had been taken on the legislation more than seven hours into the committee’s markup of the bill Wednesday. The House Financial Services Committee votes electronically at the end of markups on amendments and the final passage of the legislation.
The long hearing comes on the tail of a hectic week in Congress. Scheduled votes on overturning the Consumer Financial Protection Bureau’s overdraft rule and its larger participant rule were pushed back as Republican House leadership canceled votes for the week after a small group of GOP lawmakers joined Democratic ones in opposing a procedural rule that would have killed a bipartisan effort to allow proxy voting in Congress for new parents.
Many of the amendments in the hearing — particularly those offered early in the session — centered on the Trump family’s crypto efforts like the president’s eldest sons’ bid to launch a new digital coin. Democratic lawmakers want to add language to the bill that would restrict elected officials and high-level government employees, like those in Elon Musk’s special government employee role, from owning and profiting off stablecoin issuers.
“What I really wanted was that we could agree that we not pass a bill that legitimizes blatant greed and corruption, and I wanted you to work with me … and I wanted to insert language into the bill that … would prevent the president from using this legislation to unjustly enrich himself,” said House Financial Services Committee ranking member Rep. Maxine Waters, D-Calif., to the panel’s chairman Rep. French Hill, R-Ark. “We could not come to an agreement on that.”
She also raised issues about the separation of banking and commerce, a complaint raised by bank groups as stablecoin legislation has developed in both the House and the Senate.
“There is also no separation of banking and commerce in the current bill,” said Waters. “Without that separation, commercial companies like Walmart, Amazon, Facebook, X, all could authorize their own stablecoins.”
So far, the bill negotiations have been able to garner some Democratic support and cosponsors, which Republicans will need to pass some version of stablecoin legislation in both the House and the Senate. The Senate Banking Committee made a handful of concessions to banks in its markup of similar legislation last month, including a clarification that the bill does not change the status quo for Federal Reserve master account access.
That said, some of the Democratic lawmakers cosponsoring the House bill — including Rep. Sam Liccardo, D-Calif. — also offered their own amendments targeting conflicts of interest for government officials.
Republicans said that these amendments were unnecessary.
“The underlying bill places universal requirements on issuers of all stripes,” said Rep. Bryan Steil, R-Wis., one of the main sponsors of the bill along with committee chair Hill.
Reps. Stephen Lynch, D-Mass., Sean Casten, D-Ill., and Bill Foster, D-Ill., emerged as leading Democratic negotiators during the marathon markup after ranking member Waters left the hearing room.
One amendment from Lynch would address some bankers’ concerns about the legislation, barring crypto exchanges or others stablecoin-affiliated businesses from paying interest or yield to stablecoin holders, widening the bill itself’s prohibition on stablecoin issuers themselves offering interest.
“I’m skeptical of claims that stablecoins issued by non-banks will not compete with bank deposits and undermine the ability of banks to make loans to consumers and main street businesses,” Lynch said.
Reaction in D.C. to the stablecoin bills moving through Congress has been mixed.
The Conference of State Bank Supervisors, an organization representing state bank regulators across the country, said the group has “serious concerns” about the legislation.
“As currently drafted, the [House bill] would effectively centralize power over a nascent industry in a single federal agency,” said Brandon Milhorn, president and CEO of the group, in a letter to the House committee. “This approach would undermine the strategic advantage of cooperative federalism that has enabled American innovation for centuries and positioned the United States as the world leader in financial services.”
The American Bankers Association in a statement for the record to the committee applauded the inclusion of preventing payment of interest on stablecoins and for confirming that the bill’s intent isn’t to change eligibility for Federal Reserve master accounts.
The group did highlight continued concern with the blurring of banking and commerce.
“Non-financial commercial companies should be prohibited from owning or controlling payment stablecoin issuers,” ABA said in the statement. “This separation of commerce and payment stablecoin issuance is critical to avoid conflicts of interest and concentration of economic power.”
