US House lawmakers are delaying consideration of a bipartisan bill to curb potential risks posed by so-called stablecoins, according to people familiar with the matter, pushing back a vote on the measure for at least several weeks.
The potential deal would have marked the first significant step to apply tougher rules on the cryptocurrency industry, which developed with virtually no regulation. Biden administration officials and a bipartisan group of lawmakers worry that current laws don’t provide comprehensive standards for the new assets and have warned of potential risks to financial stability posed by stablecoins, a type of cryptocurrency intended to be pegged to the dollar or another national currency.
Lawmakers working on the potential deal between House Financial Services Committee chairwoman Maxine Waters and Patrick McHenry, the top Republican on the panel, were unable to complete work on the draft bill ahead of a planned committee vote tentatively set for 27 July, the people said.
That likely delays consideration of the package until at least September, when Congress is expected to return from its late-summer break. Spokeswomen for Waters and McHenry didn’t immediately respond to a request for comment.
Lawmakers and their staff had worked through the weekend trying to hammer out remaining policy issues with the legislation, which top Biden administration officials have pushed for. As of the morning of 25 July, however, the bill wasn’t finished and at least some core issues remained outstanding.
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Those issues include standards around so-called custodial wallets, one of the people said. Treasury officials pushed for wallet provisions that Republicans were uncomfortable with, the person said. Treasury officials have provided assistance with the drafting of the bill but haven’t yet endorsed it.
In a call with Waters on 22 July, Treasury Secretary Janet Yellen commended the work that was ongoing but stopped short of endorsing the bill, people familiar with the call said. One of the people said she needed to check in with the White House, which has yet to publicly weigh in on the draft bill.
Policy makers worry that stablecoins could be vulnerable to mass withdrawals by investors if doubts emerge about their ability to continue redeeming their tokens at a one-to-one ratio for official currencies. That could force a scramble by stablecoin issuers to liquidate their financial reserves, putting downward pressure on asset prices and potentially damaging broader markets.
But some regulatory officials and bankers grew uneasy at the speed with which the bill’s supporters had planned to vote on the measure in committee. The Independent Community Bankers of America, an influential lobbying force on Capitol Hill, on 22 July called on Waters to delay consideration of the bill, citing the need for input from bankers and other stakeholders.
Officials at the Securities and Exchange Commission and other regulators had also lodged concerns about the draft bill.
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