House Financial Services Committee Chair Patrick McHenry rebutted criticism of pending stablecoin legislation by banking trade groups in a letter last week.
McHenry argued the bill would subject stablecoin issuers to similar regulations as banks. He also contended banks could benefit from other provisions in the legislation.
The Republican chair has helped craft a bipartisan stablecoin framework with committee Democrats. But major banking industry advocates oppose aspects of the emerging proposal.
McHenry pushed back on claims the bill would give stablecoin firms preferential treatment compared to traditional institutions. His defense signals ongoing negotiations to craft a workable stablecoin law.
Responding to Criticism
The American Bankers Association (ABA) and state banking groups criticized part of the legislation allowing state-level oversight of stablecoin issuers.
In his letter, McHenry said this “fundamentally misrepresents” the bill, which would require issuers meet the same regulatory standards as banks. The groups also opposed stablecoin firms potentially accessing Federal Reserve accounts.
“You and your members weighed in heavily and the committee responded, including your top priority eliminating access to the Federal Reserve’s master accounts,” McHenry wrote to the ABA.
The chair argued the banking industry failed to acknowledge proposed benefits, like allowing banks to tokenize deposits. Banks should be able to fairly compete in the blockchain ecosystem,” he said.
Forging a Deal
McHenry has worked with Democrats, regulators and the White House for months to craft stablecoin legislation with bipartisan viability.
The groups’ objections underscore ongoing contention around specifics of the emerging proposal. But McHenry aims to address concerns and keep talks on track.
His rebuttal signals negotiation remains fluid until final text is introduced. The chair maintains the bill’s aim is fair competition and oversight for stablecoins, not preferential treatment.
The committee is slated to debate a draft stablecoin bill this week. But McHenry and Democrats are still finalizing language to gain enough support.
How regulators ultimately address stablecoins will impact traditional finance and crypto. McHenry’s response shows tricky debates ahead to pass landmark legislation.