The United States House of Representatives has pushed back the timeline for a bipartisan bill to regulate stablecoins. The delay comes as lawmakers continue to negotiate over the finer details of the bill. While the bill has been delayed until September, lawmakers could put out initial language to encourage discussion around the bill.
Voting On Bill Delayed Until September
Us lawmakers have delayed considering a bipartisan bill addressing risks posed by stablecoins. Sources close to the matter have revealed that a vote has been deferred by at least a few weeks. The delay was proposed after house members could not complete a draft in time for Wednesday’s committee meeting. There is also speculation that there are some unresolved issues in the bill related to provisions on custodial wallets from the Treasury Department and several concerns from the Securities and Exchange Commission (SEC).
The delay means that the effort of the United States to establish regulations for stablecoins is expected to be delayed until at least September, once lawmakers return from the summer break. Lawmakers had worked over the weekend to try and hammer out policy issues with the proposed legislation, which has been pushed for by the Biden administration. However, this was not enough to address all pending roadblocks. Despite the roadblock, the committee is working on issuing a draft that would include legislative language, which could come out sooner. The draft would also spur discussion around the bill.
Regulatory Oversight For Stablecoins
The bill aims to establish an oversight regime for stablecoins used by the crypto markets to counter the volatility of cryptocurrencies and other speculative assets. Passage of the bill would clear a path for nonbank firms to issue stablecoins. However, they would have to meet new liquidity and capital standards defined in the bill. According to sources, the bill also seeks to ban commercial companies from becoming issuers. The Treasury Department’s efforts to expand the bill into another area of consumer protection resulted in negotiations slowing down considerably.
The Reason For The Delay
Stablecoins represent a relatively small slice in the crypto market cap, but trade at high volumes since investors use them to move in or out of cryptocurrencies such as BTC and ETH. Secretary Janet Yellen and other Treasury Department officials have also been involved in discussions, and an administrative push for further investor protection seems to have caused a rift in talks over the weekend.
The Democrats and the Treasury Department requested that the bill include safeguards for customer wallets and that customer assets be walled off from assets of platforms hosting the wallets. The administration has shown concern about this particular point since Coinbase disclosed that customer assets and funds could be vulnerable in a hypothetical bankruptcy scenario or if other crypto firms froze customer accounts if the platform was about to fail or go bankrupt.
No Common Ground Yet
Lawmakers need to find common ground by September, after which Chairwoman Maxine Water (D-Calif) can schedule a markup. A markup is an open session where the details of the legislation can be debated before it gets voted in the committee. Chairwoman Water has been negotiating with the panel’s ranking Republican, Patrick McHenry. However, Republicans have pushed back on widening the bill’s scope, instead arguing for state-based standards for wallets. However, Treasury officials are expected to stick to their guns that the department would not accept a bill without federal protections.
If the bill gets through the house, the next challenge would be the Senate Banking Committee and its chairman, Senator Sherrod Brown. While Senator Brown is highly skeptical and distrustful of the crypto space, his views on the legislative effort are unknown thus far.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.