The U.S. could have a new federal law on stablecoins by the end of this year, lawmakers told attendees at Consensus 2022 Friday.
Lawmakers worry that a lack of regulatory clarity may be putting the brakes on crypto innovation, and the recent collapse of terraUSD (UST) only adds fuel to the fire for those calling for action.
“I'm going to go out on a limb and say we get stablecoins done this year,” Sen. Pat Toomey (R-Pa.), who put forward his own bill on the topic this year, told attendees. The audience applauded that prediction.
“We're going to need to have regulatory certainty about that,” Toomey said, citing broad consensus among lawmakers and policymakers on the need for action. “I know the [Biden] administration is interested in doing something in this space.”
While passing a bill in a matter of months is an extremely ambitious goal, especially with midterm elections coming in November, Toomey’s optimistic view appears to be shared across the aisle.
“I think we could do a stablecoin bill between now and the end of the year because it's urgent,” Sen. Kirsten Gillibrand (D-N.Y.) said, although she conceded that under normal procedures generating policy ideas via multiple committees and waiting for a new law “could be a decade.”
“We just had a financial crisis, we just had a meltdown,” Gillibrand said, referring to terraUSD's implosion.
On Tuesday. Gillibrand and Sen. Cynthia Lummis (R-Wyo.), who was also on the panel at Consensus 2022, proposed a bill to resolve issues around crypto’s taxation and supervision.
“We just had a disruption because there's no regulation, and it's not fair for the entire industry, to have no guidance or rules of the road from existing regulators,” Gillibrand said.
New U.S. crypto laws could potentially require stablecoin issuers to have proper reserves and disclose their holdings, reducing the likelihood of the kind of market panic that so dramatically led to terraUSD’s collapse last month.
Broader legislation on the Lummis-Gillibrand model would also seek to give issuers greater clarity over who they need to report to, settling a turf war between rival regulators, the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission.
Like any law, it would also need to pass the House of Representatives – but there, too, at least some lawmakers are optimistic that this can be pushed through.
“We're close to significant movement and in a big bipartisan way on stablecoins in the House,” Rep. Patrick McHenry (R-N.C.) said.
“This summer, you'll see a bipartisan bill out of the House Financial Services Committee on asset-backed stablecoins,” McHenry said. He is the ranking Republican on the committee.
“If … we have a broad agreement on this and the chair prioritizes it, you can see that reported out of committee and voted on the House floor before the election,” he said, meaning talks with the Senate begin in November or December.
“That's a pretty fast clip from a bill introduced, to it potentially being signed into law before the end of the year,” McHenry said.