New Stablecoin Bill From Lummis-Gillibrand; FAA Reauthorization Is Stablecoin Goal

Senate stablecoin bill

Yesterday, the long-rumored stablecoin bill from Senators Cynthia Lummis (R, WY) and Kirsten Gillibrand (D, NY) was revealed with a robust public roll-out. PunchBowl News’ Brendan Petersen importantly noted about the purpose of the bill, “It’s a move designed in part to nudge along separate negotiations in the House.” Read Punchbowl’s coverage.

Called “the Lummis-Gillibrand Payment Stablecoin Act,” the bill is different than the stablecoin section of the Senators’ much broader “Responsible Financial Innovation Act.” [S.2281].

Politico reported yesterday that the Lummis-Gillibrand stablecoin bill uses an updated version of the House’s stablecoin bill before it hit a political tripwire. Read that one.

Sen. Lummis issued a detailed, press release in support of the bill explaining key points of the bill such as:

    • “Protects consumers by requiring stablecoin issuers to maintain one-to-one reserves and prohibiting unbacked, algorithmic stablecoins.”
    • “Prevents illicit or unauthorized use of stablecoins by issuers and users.”
    • “Creates federal and state regulatory regimes for stablecoin issuers that preserves the dual banking system.”

more tips:

what you should know: In a Congressional version of “Bad Boys 2” starring Sens. Lummis and Gillibrand, “Stablecoins just got real… (video).”

It’s time to land the plane.

stablecoins – dual banking

The last bullet on “dual banking” (referenced above) is believed to be a key part of separate House negotiations over the “Clarity For Payment Stablecoins Act” [H.R.4766] between Dem leadership, the White House and House Republicans.

In the House bill, which made it out of a markup last July, the key sticking point for Dem leadership reportedly was that Dems supported pre-emptive rights for the Federal Reserve, but Republicans preferred shared rights between the Federal Reserve and the States – as did New York Department of Financial Services Superintendent Adrienne Harris (D).

CoinDesk notes the tiered, state/federal solution in the Lummis-Gillibrand stablecoin bill: “….a $10 billion limit for non-depository trust institutions to be able to issue payment stablecoins. Once the issuer exceeds that amount, it must be “a depository institution that has been authorized as a national payment stablecoin issuer…” Read more.

stablecoins – Chair Brown

Just before the Lummis-Gillibrand stablecoin bill dropped yesterday (Wednesday) morning, Senate Banking Chair Sherrod Brown (D, OH) signaled on Tuesday that he’s willing to consider the House Financial Service Committee’s “Clarity for Payment Stablecoins” bill.

Up until now, Chair Brown has expressed only anti-crypto viewpoints, but according to Politico’s Jasper Goodman on Tuesday, Chair Brown was ready to do some horse trading with the House saying, “We want to see a package with SAFER Banking, with RECOUP, with making sure crypto has … consumer protection and dealing with a lot of the illicit currency issues.” Read more (subscription).

SAFER Banking is about cannabis sector banking. RECOUP is about recoup-ing bank executive compensation and is an outgrowth of the March 2023 banking crisis.

more tips:

    • Push for Stablecoin Law Gets Surprise Boost from Senate’s Sherrod Brown

what you should know: Ultimately, the new Lummis-Gillibrand stablecoin bill, which has been referred to Senate Banking according to Sen. Lummis’ office, seems to be a procedural step meant to push the House bill negotiations represented by HFS Chair Patrick McHenry (R, NC) and Ranking Member Maxine Waters (D, CA) with the Senate.

Chair Brown’s support for bringing stablecoins to his Committee is big. But, Senator Elizabeth Warren (D, MA), a Senate Banking Committee member, is still looking to prevent any crypto from being allowed under the U.S. financial umbrella in comments to Punchbowl.

Also, read Sen. Warren’s letter from Tuesday to Treasury Secretary Janet Yellen on validators and more.

stablecoins – FAA Reauthorization

In an interview with CNBC’s Squawk Box yesterday (Wednesday) morning, Senators Gillibrand and Lummis stated that they were hopeful stablecoin legislation would become part of the FAA Reauthorization must-pass which is scheduled to be approved in May.

Sen. Gillibrand said, “I’m optimistic. I think there’s a certain amount of progress in the space that Cynthia and I have worked very hard on. We have great partners in the House with McHenry and Waters. I think there’s momentum.”

See the 5-minute CNBC interview.

what you should know: So, two or three weeks until stablecoin law?  Time is of the essence admitted the Senators in an election-year-Congress even though Lummis said “later” in the year was possible.

HFS markup

The House Financial Services Committee’s 9-hour markup – interrupted by 2.5 hours of House Floor voting – led by Chair Patrick McHenry (R, NC) yesterday showed partisan fissures at times as a combination of 13 bills and joint resolutions came up for a vote on the powerful committee.

All measures passed.

Ranking Member Maxine Waters and Rep. Steven Lynch (D, MA) were generally combative on the two “innovation” bills – even though one of the bills has Dem co-sponsors:

    • Financial Services Innovation Act [H.R. 7440] from Chair Patrick McHenry. Passed along party lines: 28 yes, 22 no.
    • FUTURES Act – or “Fostering the Use of Technology to Uphold Regulatory Effectiveness in Supervision Act”- led by Rep. Erin Houchin (R, IN) and a bipartisan group of co-sponsors [H.R. 7437]. Passed by voice vote. Dem leadership chose not to ask for a recorded vote which would have likely shown a split among Democrats. 

Also drawing Democratic leadership condemnation, Rep. French Hill’s (R, AR) House Joint Resolution 120 clamping down on what his party (9 Republican co-sponsors for the JR) sees as an overreach by the Financial Stability Oversight Council (FSOC) in regards to non-bank entities (such as some crypto entities) and costly SIFI (systemically important financial institutions) designations.

H.J.R.120 passed along party lines: 28 yes, 22 no.

See the HFS markup landing page which will be updated with all the voting records shortly if it isn’t already.


Q&A: Rep. French Hill on his bid to lead Republicans on the HFSC – American Banker

Pro-crypto Super PAC backs winners of Democratic primaries in Texas and Alabama for House seats – Cointelegraph

‘I’m a Pro-Freedom Candidate’: John Deaton on his Senate Race With Elizabeth WarrenCoinDesk

new alliance

Paradigm’s Head of Security leads launch of SEAL-ISAC, a crypto threat intel-sharing platform – The Block

still more tips

Former SEC crypto leader spars with blockchain lawyers over her agency’s controversial approach: ‘It’s not going to back off’ – Fortune on Yahoo

Circle, Ripple and other crypto giants came to Paris for ‘regulatory clarity’ and returned with reality check – DL News

Crypto regulatory affairs: Hong Kong regulator approves Bitcoin and Ether ETFs – Elliptic

Bitcoin falls below $60,000 as halving nerves set in – Quartz