House Stablecoin Legislation
In late July the House Financial Services Committee made tentative plans to consider legislation to regulate stablecoins and require the Federal Reserve to study development of a central bank digital currency. A draft proposal reportedly had the bipartisan support of Chairwoman Maxine Waters (D-CA) and ranking Republican Patrick McHenry (R-NC). However, last minute concerns raised by Treasury Secretary Janet Yellen and many industry representatives led to the postponement of committee action. Rep. Waters said that the Biden Administration and committee will “continue our negotiations over the August recess” and that she anticipated “coming to an agreement in the near future and marking up bipartisan legislation when we return” in September. That agreement remains elusive.
Implementing the Digital Assets EO
Also in September, several key Administration reports are expected to be released relating to digital assets. In March, President Biden issued Executive Order 14067 on “Ensuring Responsible Development of Digital Assets.” The order required several reports to be issued within 180 days, a deadline that falls on Labor Day, September 5. Will these new recommendations jumpstart the legislative process? The reports listed below are due in the days ahead.
- Future of Money and Payment Systems: The Treasury Department will report on the future of payment systems, “including conditions that drive broad adoption of digital assets; the extent to which technological innovation may influence these outcomes; and the implications for the United States financial system, the modernization of and changes to payment systems, economic growth, financial inclusion, and national security.”
- Central Bank Digital Currency (CBDC) Legislative Changes: The Attorney General will provide an assessment on whether legislative changes are necessary to issue a central bank digital currency. If deemed necessary, the Attorney General is directed to develop legislative language by October 5.
- Consumer, Investor, and Business Protections: The Treasury Department is directed to issue a report addressing the risks and opportunities of the growth of digital assets to consumers, investors, and businesses, including recommendations on potential legislative and regulatory actions that may be needed.
- CBDC technological infrastructure: The Office of Science and Technology Policy and the Chief Technology Officer of the U.S. are directed to issue a report evaluating the technological infrastructure, capacity, and expertise necessary to support a U.S. CBDC.
- Law Enforcement: The Attorney General will report on “the role of law enforcement agencies in detecting, investigating, and prosecuting criminal activity related to digital assets,” and include in the report legislative and regulatory recommendations.
- Energy and Climate Policy: The Office of Science and Technology will report on “the connections between distributed ledger technology and short-, medium-, and long-term economic and energy transitions,” including impacts on climate change and the environment.
- U.S. Competitiveness in Digital Assets: The Commerce Department will use an interagency process to “establish a framework for enhancing United States economic competitiveness in, and leveraging of, digital asset technologies.”
What’s Next?
In addition to the Waters-McHenry discussions, comprehensive cryptocurrency legislation has also been introduced in the Senate (S.4356, link to text; S.4760, link to text). It will be interesting to see if the upcoming legislative and regulatory proposals made by the Biden Administration promote or complicate current legislative efforts, and whether the ongoing negotiations with the House committee create a new momentum to advance cryptocurrency legislation before the end of the year.
Click here for a more comprehensive description of the Executive Order.