There’s an opening for the passage of stablecoin legislation this year.
Even though crypto critiques rage and bankruptcies blare while crypto prices swirl around the drain, this is the moment for Senator Patrick Toomey (R, PA) to deliver a first-of-its-kind law on stablecoins before he leaves office in January.
Complicating matters, narratives have changed in the past several months:
- Pre-“crypto winter” narrative: “Legislation is coming to help support innovation and grow the blockchain industry.”
- “Crypto winter” narrative: “Legislation needs to save us from the contagion that blockchain technology could ignite in the financial system.”
Yet, with either narrative, there’s an acute need for stablecoin legislation.
And so the table is set for Senator Toomey, who could steward narrowly-defined legislation in an expedited process that builds on his Stablecoin TRUST Act. In fact, the Senator said 2022 passage was possible only a month ago when speaking at the Consensus conference in Austin:
“Another reason why it is really urgent and extremely constructive to get a stablecoin bill done this year is that next year it is almost certain we are going to have divided government. But you know, it doesn’t really matter for this conversation because nothing’s gonna get out of the Senate that doesn’t have bipartisan support. You can’t get to 60 [votes]. Neither party is going to have 60 after this election, just as we don’t today. So that’s number one – it’s going to have to have a reasonably broad bipartisan support.
Number two: what makes me excited about this – even though stablecoins are admittedly only one silo of a big discussion, it’s a really important one – think of how much confidence it’s going to give to developers in this space if they see that Congress can come together and pass a bipartisan bill that gets signed into law and provides a sensible, pro-growth framework for regulating and allowing innovation to continue. I think that step alone will be extremely encouraging to the whole space.”
the world’s reserve currency
A new stablecoin law by the end of this year makes sense beyond protecting consumers, igniting innovation or extinguishing the perceived flames of financial contagion. It is in the interest of the United States to preserve the US dollar as the world’s reserve currency and therefore America as the leaders of the free world. A widely-used stablecoin backed by the U.S. dollar helps ensure the dollar’s pre-eminent status if the use of blockchain technology proliferates.
A lack of regulation would give life to other stablecoins – especially China’s Digital Yuan – which would threaten the U.S. dollar’s hegemony.
Senator Toomey may be the only one capable of getting stablecoin regulation passed in the near term. Though loyal to his Republican caucus and values, he appears to generally have bi-partisan appeal as a respected fair-minded legislator who tilts a bit into the center.
He’s been in the Senate since 2011 and before that as a congressman from 1999-2005. As long as it makes sense, and in recognition of his long service, his colleagues might be more amenable to a Toomey-led bill than anyone else. There’s a slew of bills with “stablecoin” in their text, but none of them come with Sen. Toomey’s imprimatur accentuated by the aforementioned Stablecoin TRUST Act and his leadership as Ranking Member on the Senate Banking Committee.
As added incentive, the passage of forward-thinking legislation could have seminal effect on the United States financial system and the confluence of government and blockchain technology as well as a crowning achievement on the Senator’s legislative career.
who can help
If Senator Toomey is to get stablecoin legislation written into law by January, key members of the House and Senate, who have revered and admired his leadership over the years, will help:
- Senator Cynthia Lummis (R, WY), who is also on Senator Toomey’s Banking Committee, and Senator Kirsten Gillibrand (D, NY), who is on the Senate Agriculture Committee, could bring their bi-partisan skills honed in crafting the Responsible Financial Innovation Act. The bill includes stablecoin sections 601 and 602 that allows private stablecoins to thrive while requiring an effective 1:1 backing with the US dollar.
- Congressman Patrick McHenry (R, NC), Ranking Member on the House Financial Services Committee, can shape and manage legislation in the U.S. House of Representatives. Moreover, McHenry was sanguine about stablecoin legislation at the Consensus conference while on stage with Senators Toomey, Lummis and Gillibrand. He said, “The reason why we will be able to move on stablecoins is because there’s alignment around the essentials of asset-backed stablecoins. Algos (algorithmic stablecoins) are a different deal. But, asset-backed stablecoins – that regime is a very reasonable one for us to come to terms with (…).” Read more. McHenry also said that he believed he could work with Congresswoman and Financial Services Chair Maxine Waters (D, CA) to get crypto legislation done given the current Democratic majority in the House.
- Congressman GT Thompson (R, PA) hails from the same state as Senator Toomey and could lend his support to stablecoin legislation in the House. Thompson’s experience and influence is inspired by spearheading the bi-partisan “Digital Commodity Exchange Act” as Ranking Member of the House Agricultural Committee. Co-sponsors Rep. Ro Khanna (D, CA), Rep. Darren Soto (D, FL) and Rep. Tom Emmer (R, MN) would seem to be potential advocates, too.
- Senator Bill Hagerty (R, TN) and Representative Trey Hollingsworth (R, IN) could lend a hand in the Senate and House, respectively, given their own Stablecoin Transparency Act initiative.
- Overall, there’s been a number of stablecoin bills introduced in Congress in the recent past. This topic will be familiar to many.
- 52 Republican and Democratic members of Congress across the Congressional Blockchain Caucus, Financial Innovation Caucus and Task Force on Financial Technology could get behind this.
- Finally, U.S. President Joseph Biden needs a win as he continues to face a myriad of challenges including Russian/Ukraine, an inflation/recession dilemma and the high likelihood that Democrats will be overwhelmed in fall Congressional elections. Getting a stablecoin bill signed by the end of 2022 could be seen as another step forward initiated, in part, by his Executive Order in March.
There’s not a lot of time for Senator Toomey to act.
According to CQ Roll Call’s trusty congressional calendar (PDF), starting this Monday, July 18, until the end of 2022, the U.S. Senate will be in session for 66 days (25 days are post-November 8 elections).
Of the 66 days, 44 days will include the U.S. House in session (17 post-November 8 elections).
And of course, fall re-election campaigns will consume the time of many members of Congress.
It’s all yours, Senator Toomey. Good luck.