Despite efforts by Representatives Maxine Waters and Patrick McHenry, proposed stablecoin legislation is unlikely to be added to the Federal Aviation Administration’s (FAA) reauthorization bill, a Democratic aide on Capitol Hill disclosed on Tuesday.
The FAA reauthorization bill, considered a “must-pass” piece of legislation, is primarily focused on funding and regulating the nation’s air transportation system. While Waters and McHenry may have sought to include stablecoin legislation as part of this bill, it appears that such efforts may not materialize.
The decision not to tack stablecoin legislation onto the FAA reauthorization bill likely stems from several factors. Firstly, the FAA reauthorization bill typically addresses aviation-related issues, and adding unrelated provisions could complicate its passage through Congress. Secondly, stablecoin legislation involves complex regulatory considerations and may require more extensive deliberation and debate than can be accommodated within the context of the FAA reauthorization bill.
Moreover, stablecoin legislation has garnered significant attention and debate in recent years, with policymakers grappling with how to regulate these digital assets effectively. Given the complexities involved, stablecoin legislation may be better addressed through separate standalone legislation or through dedicated hearings and discussions within relevant congressional committees.
While Representatives Waters and McHenry may have advocated for including stablecoin legislation in the FAA reauthorization bill, the decision ultimately rests with congressional leadership and relevant committee chairs. As such, the likelihood of such legislation being added to the FAA reauthorization bill appears low, at least based on the insights provided by the Democratic aide on Capitol Hill.
It’s improbable that stablecoin legislation will be merged with the FAA reauthorization bill, according to sources familiar with the matter.
In discussions with CoinDesk, the unnamed staff member asserted that both Senate and House leaders are hesitant to incorporate stablecoin-related legislation into the essential FAA bill. It’s common practice for U.S. lawmakers to attach less popular measures to larger bills that are highly likely to pass, aiming to garner bipartisan support for their initiatives.
Earlier this month, Punchbowl News covered Representatives Maxine Waters and Patrick McHenry’s efforts to present their combined stablecoin and FAA package to Senate Majority Leader Chuck Schumer.
The political publication highlighted that the integration of these two legislations would be “relatively unprecedented in financial services policy.”
Patrick McHenry and Maxine Waters are advocating for the passage of a stablecoin bill.
In 2023, Patrick McHenry introduced the “Clarity for Payment Stablecoins Act,” a legislative proposal aimed at regulating stablecoins in a manner similar to traditional financial instruments. As Chair of the House Financial Services Committee, McHenry’s bill represents one of several proposed policies concerning stablecoin regulation circulating within the corridors of Washington, D.C.
However, McHenry’s bill is not the sole stablecoin policy under consideration. Recently, Senators Cyntia Lummis and Kirsten Gillibrand put forth the Lummis-Gillibrand Payment Stablecoin Act. This proposed legislation presents a different approach, permitting federal and state depository institutions to serve as stablecoin issuers, while non-depository institutions would fall under federal oversight, with an emphasis on preserving state-level regulatory authority.
These legislative efforts underscore the growing recognition of stablecoins as a significant component of the financial landscape, prompting policymakers to explore regulatory frameworks to govern their operation effectively. As digital currencies continue to gain prominence and adoption, the need for clear and comprehensive regulatory guidelines becomes increasingly pressing to ensure consumer protection, financial stability, and regulatory compliance. The introduction of multiple stablecoin bills reflects the complexity of the issues at hand and the diverse perspectives among lawmakers regarding the appropriate regulatory approach to this emerging sector of the financial industry.
🚨@gillibrandny and I are introducing the most comprehensive stablecoin bill to date.
Crypto assets are revolutionizing the world and as the undisputed leader in financial innovation, the U.S. must embrace crypto assets, but it cannot be done without clear rules for stablecoins. pic.twitter.com/vwRUEBUdsl
— Senator Cynthia Lummis (@SenLummis) April 17, 2024
Senator Gillibrand, in a statement announcing the bipartisan Lummis-Gillibrand Payment Stablecoin Act, emphasized the preservation of the dual banking system and the roles of both federal and state agencies in chartering and enforcement. She underscored the legislation’s focus on consumer protection, highlighting provisions mandating one-to-one reserves, prohibiting algorithmic stablecoins, and requiring stablecoin issuers to adhere to U.S. anti-money laundering and sanctions regulations.
Meanwhile, Senator Elizabeth Warren has expressed significant concerns regarding anti-money laundering (AML) issues associated with stablecoins. Since introducing the Digital Assets Anti-Money Laundering Act (DAAMLA) in 2022, she has garnered bipartisan support for the initiative. During a recent hearing, Warren emphasized the importance of implementing regulatory frameworks to address AML risks associated with the increasing adoption of stablecoins. She stressed the need to prevent illicit actors, including terrorists, drug lords, and human traffickers, from exploiting new financial avenues.
The prospects of advancing stablecoin legislation through Congress remain uncertain. Reports indicating that crypto-related legislation will not be incorporated into the FAA legislation may diminish the likelihood of its approval. The exclusion of stablecoin provisions from the FAA bill could significantly hinder the legislative progress of stablecoin regulation.
read more about: Economic Secretary Bim Afolami announces plans for the UK to introduce fresh legislation on crypto staking and stablecoins by July.
