Sen. Hagerty’s draft bill splits stablecoin regulation between the Federal Reserve for banks and OCC for non-banks.
The draft requires stablecoin issuers to maintain 1:1 reserves with U.S. currency, ensuring financial stability.
Bipartisan efforts continue to push for a stablecoin regulatory framework, with hopes of passing legislation by the year's end.
Senator Bill Hagerty, a crypto-friendly Tennessee Republican, has introduced a draft bill aiming to create a regulatory framework for stablecoins. The proposed legislation aligns closely with the Clarity for Payment Stablecoins Act, which has been under development in the House of Representatives by Rep. Patrick McHenry and Rep. Maxine Waters.
Notably, this initiative comes at a critical time, with growing calls for a comprehensive regulatory approach to stablecoins, an increasingly vital part of the digital asset ecosystem.
https://twitter.com/SenatorHagerty/status/1844563650087981486 Federal and State Oversight
More so, Hagerty’s draft introduces a structure that splits regulatory oversight between federal and state authorities. Federal banks would fall under the supervision of the Federal Reserve, while non-banks would be overseen by the Office of the Comptroller of the Currency (OCC).
Additionally, the draft includes a provision allowing stablecoin issuers who surpass a $10 billion threshold to apply for a waiver, enabling them to remain under state jurisdiction. This framework is designed to strike a balance between state and federal oversight, a key sticking point in previous attempts to regulate stablecoins.
Moreover, one notable aspect of the draft bill is the requirement for issuers to maintain reserves on a one-to-one basis with U.S. currency. This approach seeks to ensure the stability of these digital currencies while mitigating risks to the broader financial system.
Furthermore, Senator Hagerty emphasized that stablecoins could play a significant role in enhancing transaction systems and even help increase demand for U.S. Treasury bonds. With the national deficit in focus, stablecoins may provide a new avenue for sustaining economic stability, further underscoring the importance of clear regulations.
Bipartisan Efforts and Future Prospects
Besides, the push for a stablecoin regulatory framework is not new. In fact, the efforts have seen bipartisan support in both the House and Senate. However, the path to legislation has been slow, complicated by differences over the role of state regulators and federal agencies.
Recently, Rep. Maxine Waters, a key figure in the House's efforts, expressed willingness to strike a "grand bargain" on stablecoins by the end of the year. Senator Hagerty's draft may serve as a new starting point for further negotiations, as lawmakers work to finalize the long-delayed framework.
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