A potential breakthrough in the long-awaited regulation of stablecoins could be on the horizon. Rep. Maxine Waters (D-Calif.) has proposed a deal with Rep. Patrick McHenry (R-N.C.), the Republican chair of the House Financial Services Committee, to advance stablecoin legislation before the end of 2024.
This proposed package could also address other significant issues, including deposit insurance reform and legislation allowing legal cannabis companies to access the banking system. However, the deal’s success remains uncertain, as it depends on the approval of both McHenry and House Speaker Mike Johnson (R-La.).
If the agreement moves forward, the National Defense Authorization Act could be used to push the legislation through. With McHenry, a strong ally of the crypto sector, not seeking re-election, Democrats are eager to finalize this deal before a new Republican takes over the financial services committee.
The legislation focuses primarily on stablecoins backed by deposits of dollars and other highly liquid instruments, aiming to discourage algorithmic stablecoins. While the current proposal contains numerous details and areas of focus, it represents a departure from previous versions.
Stablecoins, cryptocurrencies pegged to the U.S. dollar, hold a market cap of $172 billion and process trillions in global volume. Major players like PayPal and Visa are increasingly entering the stablecoin business, highlighting the critical need for legislation.
Stablecoin legislation would significantly update U.S. laws to address this growing segment of the cryptocurrency sector. However, any legislative action will ultimately depend on the outcome of the November 2024 elections.
Rep. Maxine Waters, a long-time advocate for stablecoin legislation, has recently declared the advance of cryptocurrencies as “inevitable.” The upcoming Benzinga Future of Digital Assets event on November 19 will feature these discussions and the future of stablecoin regulation as central topics.
