The two most important members of the U.S. House of Representatives committee that oversees much of the financial system almost pulled off a miracle: Writing a bill to establish the first real federal regulations over crypto in the U.S. Alas, House Financial Services Committee Chair Maxine Waters (D-Calif.), and the panel’s top Republican, Rep. Patrick McHenry of North Carolina, faced 11th-hour obstacles for their stablecoin legislation that proved too high to clear.
While the 2022 window slammed on their effort, the work they already accomplished has pushed the tricky issue of stablecoin oversight much closer to reality. Top stablecoin issuers including Circle Internet Financial have been trying to meet what they think the standards will be for the reserve funds before the rules are even set. U.S. lawmakers generally agree that a stablecoin bill will require full, one-to-one backing with liquid assets such as cash and U.S. Treasury bills.
Read more: Presenting CoinDesk's Most Influential 2022
The detonation of FTX has also spurred more reaction on Capitol Hill demanding legislative answers to risky behaviors in the industry. Democrats in Congress had been fuming about the failure of algorithmic stablecoin terraUSD (UST) earlier in the year, and had cited that failure as a reason for a speedy response from the government – including limits on whether mathematical wizardry could fill the role of a token’s reserves.
Waters and McHenry will probably still be on the committee in January, even though the change to a Republican majority in the House will likely put McHenry at the helm. There will still be hurdles to clear for the bill, including a debate over how much authority state regulators should have and how assets should be held. But because they set the stage this year, the pair should be able to pick up where they left off and get a presidential signature on a law that sets rules of the road for stablecoins such as Tether’s USDT and Circle’s USDC.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.