On Wednesday, Committee Republicans passed a dangerous bill that would empower President Trump, his family, and his insiders – including billionaires like Elon Musk – to continue exploiting the power of the Presidency to establish multiple crypto schemes, including a stablecoin, to enrich himself and his family. This Republican bill, misleadingly titled the “STABLE Act,” fails to provide needed protections for our nation’s consumers and if signed into law, threatens to destabilize the economy. It also disregards years of bipartisan work carried out by the top Democrat on the House Financial Services Committee, Congresswoman Maxine Waters (D-CA) and former Republican Chairman Patrick McHenry (R-NC) to establish a robust federal framework to oversee this unique type of cryptocurrency.

Stablecoins are a type of cryptocurrency designed to maintain a “stable” value if they are properly backed by strong reserves, like the U.S. dollar. In the crypto world, because of their stable value, stablecoins are often used to enter or exit the crypto ecosystem and trade between crypto like Bitcoin and Ethereum. While a few states have established or are establishing a state framework, there isn’t a federal framework to regulate stablecoin issuers or Federal Reserve authority over the digital wallets where users hold their coins, leaving consumers at risk of fraud at the hands of bad actors. With stablecoin usage growing, their use could also have implications on the broader economy and our national security, if not regulated properly.

During Wednesday’s 13-hour Committee markup which ended just before midnight, Congresswoman Maxine Waters led Committee Democrats, including Representatives Nydia M. Velázquez, Brad Sherman, David Scott, Stephen F. Lynch, Al Green, Bill Foster, Sean Casten, Rashida Tlaib, Sylvia Garcia, and Nikema Williams in sounding the alarm on the dangers of the Republican bill:

• Hands President Trump power to write his own rules and defraud investors with his own coin. Since last Congress, President Trump has come into office and leveraged the power of the Presidency to establish multiple crypto schemes to enrich himself and his family. From a fraudulent memecoin – which collectively lost his investors $2 billion while him and his family pocketed $350 million – to a crypto reserve that boosts the price of crypto held by him and his cabinet – to, most recently, brazenly launching his own stablecoin, through World Liberty Financial. The Trump regime has also begun exploring how to incorporate stablecoins in the payment of government assistance and grants. This bill does not include any language to block Trump from further enriching himself through his own stablecoin; in fact, it enables it.
  
  
• Gives Elon Musk, Mark Zuckerberg, and Jeff Bezos ability to profit from crypto schemes. This bill undermines the clear separation between banking and commerce which was established to prevent any one firm from gaining too much power in the economy. Unfortunately, this bill paves the way for Facebook to revive its failed stablecoin project, and it grants commercial companies – including Big Tech giants like Facebook, Amazon, and X – the ability to get in the business of banking and launch their own stablecoins, posing significant risks to consumers.
  
  
• Protections for consumers are WOEFULLY INADEQUATE. This bill wipes out all the critical consumer protections included in the Waters-McHenry bill designed to ensure consumers can hold payment stablecoins confidently. It lacks proper regulation, oversight, and accountability for entities that harm consumers. Not to mention, in this bill, the Federal Reserve has no authority over state regulated digital wallets that consumers use to hold their stablecoins, leaving American consumers who use those wallets vulnerable. And if a stablecoin issuer fails, the bill does nothing to set up a resolution regime to protect consumers.
  
  
• Puts national security on the back burner. This bill lacks clear criminal penalties and enforcement mechanisms to ensure compliance with regulations and prevent illicit activities, like money laundering or terrorism financing. There’s also a glaring oversight gap that paves the way for bad actors to exploit the system. Importantly, this bill also fails to address a loophole that allows firms like Tether that can pose risks to national security to avoid US regulation and oversight by issuing their stablecoins offshore but selling into the US without strong enough penalty.
  

Committee Democrats offered more than 30 amendments in response to these concerns, sparking several hours of debate that stretched well into the night. Republicans requested combining the amendment votes on this bill to fast track the process so they could go home, but Democrats declined – forcing Republicans to cast a vote on every single amendment. And it wasn’t just Democrats who offered amendments in response to concerns – staunch crypto supporter and Republican Congressman Warren Davidson (R-OH) also offered an amendment and ultimately sided with Democrats to vote “no” on this bill.

ALL amendments were denied by Committee Republicans

Republicans denied Democratic amendments designed to:

Combat Trump’s Glaring Conflicts of Interest:

• Ensure stablecoin issuers controlled by the President, Vice President, Members of Congress, and relevant family members do not review rules or final text before it is issued. (Rep. Waters)
  
• Prohibit any stablecoin issued by a company owned, affiliated or controlled by an employee of the U.S. government or an officer, member, or their family members from being required to be used to conduct transactions with the government. (Rep. Waters)
  
• Provide that if you are the President, a Cabinet member, or a special government employee (e.g. Elon Musk) and have over $10 million invested in any stable coin or cryptocurrency that you must disclose your purchases or sales. (Rep. Sherman)
  
• Prohibit the President, Vice President, and other public officials, from issuing, sponsoring or promoting a stablecoin. (Rep. Liccardo)
  

Uphold Consumer Protection:

• Explicitly affirm the authority of the CFPB with respect to stablecoin issuers and customers who own stablecoins. (Rep. Tlaib)
  
• Require stablecoins to be issued only on permissioned blockchains. (Rep. Lynch)
  
• Limit the activities of a stablecoin issuer to only perform activities that directly related to issuing stablecoins, and not other activities, like lending. (Rep. Lynch)
  
• Require stablecoin issuers with more than $1 billion in assets to prepare an annual financial statement, comparable with requirements for FDIC-insured banks. (Rep. Casten)
  
• Require stablecoin regulators to adopt an anti-deceptive practices and anti-manipulation rule that is consistent with the CFTC rules required by Dodd-Frank. (Rep. Casten)
  
• Prohibit special government employees from having an ownership interest in a payment stablecoin issuer. (Rep. Tlaib)
  
• Require robust Federal oversight over all state-licensed payment stablecoin issuers, an approach that is similar to the existing dual banking regulatory framework and that is provided by the bipartisan Waters-McHenry stablecoin bill. (Rep. Lynch)
  
• Remove a provision that applications are automatically deemed approved if the primary federal regulator fails to render a decision of approval or denial within 120 days. (Rep. Lynch)
  
• Prohibit a payment stablecoin issuer tying the offering or selling of payment stablecoins with a condition that the purchaser obtain additional products or services. (Rep. Garcia)
  
• Allow tokenization of reserves of any eligible reserve assets. (Rep. Williams)
  
• Prohibit crypto exchanges and any affiliated individuals from paying any type of remuneration (e.g., interest or yield) to holders of stablecoins based on their ownership of those stablecoins. (Rep. Lynch)
  

Prohibit Bailouts and Promote Financial Stability:

• Make clear that no Federal agency may bail out an issuer of a stablecoin to prevent the failure or bankruptcy of such issuer, including using Federal Reserve liquidity facilities and the Treasury’s Exchange Stabilization Fund. (Rep. Sherman)
  
• Prohibits stablecoin issuers from being bailed out through a Federal Reserve emergency lending facility or Treasury’s Exchange Stabilization Fund. (Rep. Foster)
  
• Require that any stablecoin issuer that receives any emergency assistance shall be prohibited from issuing new stablecoins for a period of one year or until Treasury conducts a full review of the soundness of the issuer and approves the resumption of such sales. (Rep. Lynch)
  
• Prohibit the use of uninsured deposits to be reserves for stablecoins, ensuring they would have to be insured, and eliminate provisions allowing foreign banks that do not operate in the U.S. from holding U.S. stablecoin reserves. (Rep. Casten)
  
• Prohibit the use of uninsured deposits to be reserves for stablecoins, ensuring they would have to be insured to qualify. (Rep. Foster)
  
• Require the Treasury to include in the Financial Stability Oversight Council’s (FSOC) annual reports to Congress, a section that discusses the status of the threat payment stablecoins pose to the financial stability of the United States. (Rep. Velázquez)
  

Protect National Security:

• Apply Bank Secrecy Act (BSA) requirements to all wallets, including unhosted wallets, requiring know-your-customer (KYC) and other BSA legal and regulatory requirements. (Rep. Sherman)
  
• Direct Treasury to authorize appropriate regulation for cryptocurrency mixers. (Rep. Sherman)
  
• Direct Treasury consulting with DOJ to propose a rule that outlines issuers would use “freeze on chain” to comply with sanctions and other laws. (Rep. Casten)
  
• Prohibit stablecoins from being issued if they are pegged to a national currency of a hostile foreign power. (Rep. Lynch)
  
• Require payment stablecoin issuers have the capacity to “freeze on chain” to comply with sanctions and other laws. (Rep. Foster)
  
• Develop a path by which an individual wallet holder could choose to have their personal wallet verified as compliant with the Bank Secrecy Act. (Rep. Foster)
  
• Prohibit all foreign-issued stablecoins from being offered or utilized in the U.S., absent registration. (Rep. Lynch)
  

Separate Banking and Commerce:

• Maintain the separation of banking and commerce and prohibit non-financial commercial companies from having their own stablecoins. (Rep. Waters)
  
  

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