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HFSC Markup of the STABLE Act — April 2

May 5, 2025 Uncategorized

HOUSE FINANCIAL SERVICES COMMITTEE MARKUP OF THE STABLE ACT 

Attached is a summary of the hearing prepared by Delta Strategy Group that includes several high-level takeaways, followed by summaries of discussion points.  For questions on the note below, please contact the Delta Strategy Group team. 

Overview

Legislation Under Committee Consideration 

  • H.Res. 259, Of inquiry requesting the President to provide certain documents in the President’s possession to the House of Representatives relating to the access provided to the staff and advisers of, including any individual working for or in conjunction with, the Department of Government Efficiency to the systems, applications, and accounts, and any information contained therein, of the Bureau of Consumer Financial Protection. 

Key Takeaways

The following is a summary of the main topics explored in the markup, with further details in the Discussion section below.   

  • On April 2, the Committee voted 32-17 in favor of sending the STABLE Act and accepted amendments to a House floor vote.  The six Democrats who voted in favor of Representative Steil’s (R-WI) amendment and the Act were Representatives Gottheimer (D-NJ), Meeks (D-NY), Liccardo (D-CA), Torres (D-NY), Himes (D-CT), and Bynum (D-DC).  Several amendments to Representative Steil’s accepted amendment, offered by Representatives Waters (D-CA), Sherman (D-CA), Foster (D-IL), Liccardo (D-CA), Lynch (D-MA), Welch (D-VT), Tlaib (D-MI), Williams (D-GA), Casten (D-IL), and Garcia (D-TX) were not adopted by the Committee.    
  • Republicans, led by Chairman Hill (R-AR) and Representative Steil (R-WI), criticized the amendments offered as unnecessary and duplicative due to the STABLE Act’s strong customer protections, oversight measure, and market safeguards, noting that certain amendments are better suited within market structure legislation.  On audit requirements and thresholds for issuers, Representative Steil discussed the importance of tailoring the regulatory burden to the size and scope of the entity, suggesting language the compares to the reporting requirements in the GENUIS Act.    
  • Representative Emmer (R-MN) discussed how the Act eliminates the previous role of the Fed over nonbank issuers, and scales back federal involvement in the state pathway, while providing a pathway for global reciprocity and U.S. leadership in payment stablecoins, backed and symbiotically strengthened by the U.S. dollar.  Chairman Hill discussed how the Act offers both state and federal pathways for issuers and sets standards for stablecoin issuers operating in comparable foreign jurisdictions, emphasizing that innovation needs guardrails, not roadblocks.  Representative Huizenga (R-MI) commented on how limiting stablecoin issuance to federally chartered banks would stifle innovation and limit the ability of both federal and state authorities to tailor regulations to the specific risks of stablecoins.  
  • Democrats, led by Ranking Member Waters (D-CA) and Representative Lynch (D-MA) issued warning against breaking down the separation of banking and commerce, stressing the need to create a firewall to prevent government bailouts of stablecoin issuer failures and burden on taxpayers.  They warned against passing legislation that does not have safeguards against government bailouts of stablecoin and cryptocurrency collapse.  
  • Representative Casten (D-IL) questioned whether entities should be regulated as deposit-taking institutions that earn interest on the money and if they should be allowed to use that money.  He noted that the $1 billion threshold is meant to tie the reporting threshold to FDIC rules to avoid creating an arbitrage opportunity, stressing the need to amend the Act to address systemic risks.  
  • Representative Foster (D-IL) emphasized the need for an amendment requiring FDIC insurance, arguing it would solve many of the issues and concerns around stablecoin issuers and customer protection, recognizing the eventuality of the bailouts that will occur without this firewall.  He questioned why the Act’s list of allowed things to comprise reserves includes funds held as demand deposits, not withstanding the fact that insured depository institutions are only insured up to $250,000.  Chairman Hill stated that he does not expect uninsured deposits under the Act’s framework, emphasizing that the Act calls for the use of insured deposits and insured depository institutions.  
  • Representative Meeks (D-NY) emphasized the need to strengthen AML and BSA measures within the Act, alongside the need to address the issue of limitations on offshore issuers.  He said that to ensure clear rules and regulations around stablecoins, he supports the Act.  
  • Representative Lynch discussed how one of his amendments would prohibit crypto exchanges or other parties affiliated with stablecoins from paying interest or yield to stablecoin holders as well as preventing unnecessary and harmful competition between non-banks and FDIC insured banks.  He emphasized the issue of the Act excluding a provision that would prevent a stablecoin issuer from paying interest or yield to a holder, with crypto exchanges offering incentives to attract stablecoin holders.  He highlighted the need for all stablecoins issuers to be FDIC insured and warned against creating competition between crypto exchanges and banks during discussion with Chairman Hill. 

Discussion

Chairman French Hill (R-AR) 

  • The STABLE Act is a strong, effective, and crucial piece of legislation that creates a clear regulatory framework for payment stablecoins.  It is a necessary step towards providing regulatory certainty in ensuring the U.S. remains at the forefront of digital asset development.  The need for a payment stablecoin framework has never been more urgent, nor could the need for clear regulatory guardrails be more apparent.  We need to foster the best parts within the benefits and risks of payment stablecoins, the innovative part, while mitigating the risk.  
  • The absence of a federal framework has led to the only option being a state-by-state regulatory landscape.  The STABLE Act addresses this challenge by establishing a unified regulatory structure while preserving the critical role of state oversight. It provides clear definitions and classifications for payment stablecoins, offering both state and federal pathways for issuers. It also sets standards for stablecoin issuers operating in comparable foreign jurisdictions.   The STABLE Act does not pick winners and losers but creates a pathway for all issuers subject to very strict and high federal standards, allowing for the intervention of federal regulators for both bank and non-bank issuers. 
  • The Act mandates that stablecoins be backed 1:1 by high quality liquid assets, establishing clear redemption procedures and requires monthly Disclosures on reserves and churns. The Act incorporates robust consumer protection measures and tailored capital, liquidity and risk management requirements.  It strikes the right balance, supporting innovation while safeguarding consumers and reinforcing U.S. global leadership in digital assets in the global digital economy. 
  • Placing the Bank Holding Company Act (BHCA) restriction on stablecoin issuers, along with some other aspects of the language in their amendment, is not fit for purpose to address the issues raised.  The list of financial activities in the BHCA, which was passed in 1956 and updated in the 1990s, does not contemplate any kind of digital asset activities that are financial in nature.   There is much work to be done for industry to meet the full requirements that are contemplated by the Act in order to be in compliance. 
  • The market structure bill from the last Congress, H.R. 4763, clearly defined market participants and activities that were agreed upon to be financial in nature in the context of digital assets.  We must move a market structure bill, in conjunction with the STABLE Act in its current form, as we are making progress in the House. 
  • We do not need these amendments as the STABLE Act is the firewall against the potential need for a bailout or for a poorly run stablecoin. We have addressed all the concerns outlined about building a strong firewall, with high standards and strong federal regulatory assertion around stablecoins.  I do not expect uninsured deposits under the Act’s framework as it calls for the use of insured deposits and insured depository institutions under the limitations set by regulation subject to the FDIC and the NCUA to address consumer and institutional risks. 
  • Any U.S. CBDC must be authorized by Congress, as the Constitution grants congress the sole power to coin money, and this shall not be altered for a U.S. CBDC. That is why I support Representative Emmer’s amendment to the Anti-CBDC Surveillance State Act, because we cannot alter how the Fed conducts monetary policy and the various concerns about a U.S. CBDC enabling government overreach and undermining safeguards.  

Ranking Member Maxine Waters (D-CA) 

  • We are pushing legislation through as quickly as possible without considering some of the key issues that will impact American investors and consumers.  This Act lacks many of the consumer protections included in FIT21 to ensure customer confidence in stablecoins and does not include any oversight or consequences for entities that harm consumers.   
  • WLF publicly launched a dollar-pegged stablecoin at the DC Blockchain Summit, called USD1, which raises serious concerns, particularly given that the President launched his own stablecoin exactly one week prior to this markup.    There is nothing stopping President Trump from forcing the American people to use his own stablecoin, USD1.  There are very real conflict-of-interest issues here, with no separation of banking and commerce in the current bill.  Without that separation, commercial companies could all launch their own stablecoin, such as co-President Musk.  
  • The Act does not adequately address national security concerns.  The 18-month prohibition on custodial intermediaries offering or selling payment stablecoins in the U.S. unless the payment stablecoin is issued by a permitted payment stablecoin issuer is a step toward addressing our concerns about Tether, but it will not be practically effective because there are no criminal penalties or enforcement mechanisms to hold violators accountable. 
  • The Fed does not have any authority over state-regulated digital wallets that consumers use to hold their stablecoins.  The Act does nothing to set up a resolution regime to protect consumers if a stablecoin issuer fails.  Without proper market safeguards, we will expose our economy to a potential crypto collapse. 
  • My amendments and other Democratic amendments to the STABLE Act would implement necessary protections against conflicts of interest in the stablecoin ecosystem, creating more transparency and accountability with the new lack of independent agencies’ authority, especially in the light the of the current Administration’s excessive affiliations and investments.  We need to establish and secure the separation of banking and commerce, preventing concentrations of power and conflicts of interest that compromise the ability of banks to act objectively, while undermining responsible innovation.  

Subcommittee Chair Bryan Steil (R-WI) 

  • The STABLE Act will shape the future of digital asset regulation and protect the integrity of our financial system, establishing a comprehensive framework for the issuance and operation of dollar-denominated payment stablecoins.  Digital currencies pegged to stable assets like the U.S. dollar are already driving innovation across industries and cementing the dollar’s role as the world’s reserve currency. 
  • We must ensure that as we embrace these advancements, we also establish the necessary safeguards to protect consumers, maintain trust, and ensure the integrity of our financial system. The STABLE Act provides the oversight needed to foster innovation while giving businesses the regulatory clarity they need to continue developing secure and effective digital payment solutions. It is a foundational step toward securing the future of financial payments in the United States and solidifying the dollar’s continued dominance as a world reserve currency. 
  • The STABLE Act is the result of extensive collaboration between members of this committee, financial sector stakeholders, and the administration—crafting legislation that is forward-thinking, pragmatic, and designed to protect consumers while fostering innovation. The absence of consistent federal regulation for stablecoins has led to uncertainty and risk for both consumers and businesses, with issuers facing a fragmented regulatory environment that makes compliance difficult.  The STABLE Act creates a clear regulatory framework for stablecoins, with strict requirements for reserves, transparency, and compliance with AML laws. It ensures that issuers are licensed, supervised, and held to robust standards of enforcement while creating a nationwide framework. 
  • The Act preserves the important role of state oversight, balancing both state and federal authority, providing the necessary certainty to engage with emerging technologies.  It ensures that the U.S. financial system remains secure, competitive, and adaptable in a rapidly changing global landscape.  Regarding the threshold of audit requirements for issuers, we must tailor the regulatory burden to the size and scope of the entity. 
  • Stablecoins and digital assets allow U.S. manufacturers to export products abroad more easily and receive payments backed by the U.S. dollar, enable contractors at home to send payments faster and more cheaply, and encourage entrepreneurs in other nations to conduct business backed by the US. dollar.  These are positive developments making money movement faster, less expensive, and more secure. 

Committee Vice Chairman Bill Huizenga (R-MI) 

  • Stablecoins can address inefficiencies in the U.S. payment system, maintaining the U.S. dollar as the world’s reserve currency at the forefront of any discussion.  The private sector must lead the way, fostering innovation and competition, but a clear regulatory framework would be needed to usher in this modern technology. 
  • The STABLE Act establishes clear definitions and regulatory classifications for payment stablecoins and recognizes several regulatory pathways for approving and overseeing stablecoin issuers, specifically preserving a state option that, at times, offers a lighter-touch approach.  This so-called “race to the top” allows states to compete to implement more stringent regulatory frameworks, signaling that their jurisdiction can offer the safest and most consumer-friendly regime. 
  • The Act sets requirements for issuers of payment stablecoins in comparable jurisdictions abroad. While several foreign jurisdictions, including the EU, have established or are developing frameworks for stablecoins, a U.S. federal framework is essential for maintaining global competitiveness. 
  • The current Act provides vital consumer protections, including a prohibition on the commingling of customer funds by custodians, prioritizing payment stablecoin customers over issuers and creditors, and subjecting payment stablecoin issuers to BSA obligations.  Digital asset-related crime remains a small portion of the overall digital asset economy and is comparatively smaller than the share of illicit funds involved in traditional finance. 
  • We must establish a regulatory framework that targets the activity, not the technology or innovation.  Applying a one-size-fits-all regulatory framework to stablecoin issuers will prevent smaller startup issuers from being able to compete with larger, more established players who can afford the cost of compliance under a federal banking regime.  Limiting stablecoin issuance to federally chartered banks would stifle innovation and limit the ability of both federal and state authorities to tailor regulations to the specific risks of stablecoins. 
  • Stablecoins have the potential to improve the existing payment system by supporting faster and more efficient payments, with one study estimating they could reduce remittance costs by as much as 80 percent. With the proper safeguards to protect reserves and maintain liquidity, the risk of becoming a catalyst for financial instability is minimal. Straightforward, rules-based regulation that focuses on preventing fraud and promoting transparency will ensure innovation is nurtured in the U.S. rather than driven overseas. 

Representative Tom Emmer (R-MN) 

  • The STABLE Act is a globally competitive regulatory framework for dollar-backed stablecoins, encouraging domestic innovation and bringing transaction volume back into the U.S. with visibility and control.  Any stablecoin bill is about national security, and about preserving and extending the dollar’s dominance as the world’s reserve currency.  The U.S. dollar is the currency the world counts on to do business, and our global position relies on that status.  This is a nonpartisan issue.  Most crypto activity settles in stablecoins and with the passage of this Act, our entire global digital economy can settle in dollar-backed stablecoins that are safe and reliable. 
  • The Act eliminates the previous role of the Fed over nonbank issuers and scales back federal involvement in the state pathway. Importantly, it provides a pathway for global reciprocity so we can export dollars to the fullest extent possible. It also allows for invention and innovation in the payment stablecoin space, such as the creation of privacy stablecoins, which would function similarly to existing privacy coins.  The STABLE Act is not a perfect bill, but it is the perfect bill for this moment. 

Subcommittee Ranking Member Stephen Lynch (D-MA) 

  • The STABLE Act is not inviting stability into the financial markets, and I share all Ranking Member Water’s concerns.  We are not providing stability by rushing through industry friendly legislation that removes essential consumer protections, impairs regulatory oversight, and will facilitate market volatility.  
  • President Trump is nominating heads of regulatory agencies that have been handpicked by the crypto industry, with the SEC is dropping legitimate cases against crypto companies.  These are clear examples of corruption and conflicts of interest that will undoubtedly facilitate another financial disaster if they are not addressed in the STABLE Act, risking the derailment of payment systems and a complete takeover of the financial system by big tech companies.   
  • Without an adequate regulatory framework that mirrors traditional financial laws, we increase the likelihood of runs that will trigger systemic crises, with zero accountability and with the burden on the taxpayer.  
  • The STABLE Act would essentially give stablecoin issuers the privileges entitled to depository institutions without having to comply with any of the Regulations that accompany those responsibilities.  We must create a robust regulatory regime to ensure the integrity of our financial system, with rules around capital, liquidity, safety and soundness, and AML.  We need to pass amendments that strengthen transparency and rules on conflicts of interest and institutional divestments.  
  • The Act does not preclude a stablecoin exchange or crypto exchange from Collecting interest and paying interest rather to depositors, presenting a host of concerns about exchanges being in competition with banks, especially the amount that has to be held in reserve.  My amendment would prohibit crypto exchanges or other parties affiliated with stable coins from paying interest or yield to stablecoin holders as well as preventing unnecessary and harmful competition between non-banks and FDIC insured banks.  The Act does not include a provision that would prevent a stablecoin issuer from paying interest or yield to a holder, with crypto exchanges offering incentives to attract stablecoin holders.   
  • Stablecoins have proven to be anything but stable, and over twenty stablecoins have collapsed, yet provisioning in the Act does little to ensure that stability.  We have seen a steady march of these collapses, with government bailouts using taxpayer money.   I support all amendments that strengthen the Act’s consumer protections.  
  • On market structure, we cannot take power away from the SEC and push all the responsibilities over to CFTC, which does not have the ability to police it.  It will create a lawless situation where the police are handcuffed and cannot rescue us.  We cannot displace the separation between banking and commerce nor steamroll regulators. 
  • Stablecoin issuers will look for the path of least resistance and oversight, creating a race to the bottom.  Legislation must provide federal regulators with sufficient authority, and states must have the ability to regulate issuers active in their states.  This Act allows non-banks to issue stable coins without obtaining federal deposit insurance and without complying with the laws governing FDIC insured banks. 

AMENDED AND REPORTED ACTS 

Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act 

  • An amendment to the amendment in the nature of a substitute to HR. 23 92, offered by Representative Steil (R-WI), reported to the Clerk without objection and serving as the base text for the purposes of the amendment.  The Act was reported favorably to the House floor with a vote of 32-17.  The six Democrats who voted in favor were Representatives Gottheimer (D-NJ), Meeks (D-NY), Liccardo (D-CA), Torres (D-NY), Himes (D-CT), and Bynum (D-DC).  
  • Sponsors and co-sponsors of the STABLE Act include Representatives Hill (R-AR), Torres (D-NY), Emmer (R-MN), Huizenga (R-MI), Meuser (R-PA), Kim (R-CA), Moore (R-NC), Downing (R-MT), Haridopolos (R-FL), Gottheimer (D-NJ), Liccardo (D-CA), Timmons (R-SC), Lawler (R-NY), Nunn (R-IA), Rose (R-TN), Stutzman (R-IN). 
  • Several amendments to the amendment in the nature of a substitute to HR. 23 92, were offered by Representatives Waters (D-CA), Sherman (D-CA), Foster (D-IL), Liccardo (D-CA), Lynch (D-MA), Welch (D-VT), Tlaib (D-MI), Williams (D-GA), Casten (D-IL), and Garcia (D-TX).  Recorded votes on the pending amendments were postponed.  

Financial Technology Protection Act 

  • An amendment to the amendment in the nature of a substitute to HR. 2384, sponsored by Representative Nunn (R-IA), passed with a 49-0 Committee vote.   

1071 Repeal to Protect Small Business Lending Act 

  • An amendment to the amendment in the nature of a substitute to HR. 976, sponsored by Representative Williams (R-TX), passed with a 27-22 Committee vote. 

Anti-CBDC Surveillance State Act 

  • An amendment to the amendment in the nature of a substitute to HR. 1919, sponsored by Representative Emmer (R-MN), passed with a 27-22 Committee vote. 

Promoting New Bank Formation Act  

  • An amendment to the amendment in the nature of a substitute to HR. 478, offered by Representative Barr (R-KY), passed with a 28-21 Committee vote.