Rep. McHenry Tempers Expectations On Imminent Stablecoin Legislation

Rep. Patrick McHenry (R, NC) was the focal point of Politico’s “Writing the Rules of Crypto” event today at Washington, D.C.’s Hotel Washington.

The congressman clearly wanted to temper expectations on whether a bill on stablecoins could be forthcoming from the House Financial Services committee where he serves as Ranking Member along with Chairwoman Rep. Maxine Waters (D, CA).

Politico reporter Sam Sutton guided the panel discussion and cut right to the chase with McHenry asking him, “What’s the hold-up with stablecoin legislation?”

McHenry launched in eagerly saying, “A lot.  First, it’s an election year – big policymaking in an election year is hard.” Then, he provided a brief history on why regulatory guardrails were needed as well as revealing the influence of state stablecoin legislation – in particular, New York’s – which has helped inform the work undertaken thus far by the Financial Services committee in coordination with the Fed and Treasury.

And… what’s the very, very latest?

“Both Chairwoman Waters have taken where we are and laid it before our members and they’re trying to digest it right now and that’s gonna be really the question – when we can take action is based on the feedback we’re getting from our members. I’ve had four member meetings, we’ve had a number of stakeholder engagements over the last three months. Important stuff to read them in, what the contours of the bill are. And now we’re trying to get feedback in a bigger, more fulsome way from the members. I’m cautiously optimistic.”

While Rep. McHenry believed Republicans would become the majority in the U.S. House of Representatives, and therefore make him Chair of Financial Services, this seemed unrelated to the Congressional process he believed necessary for creating effective stablecoin legislation.

He said, “So whether [stablecoin legislation] gets done now or later, I’m still gonna have to deal with the Senate and we’re still gonna have to deal with a Democrat White House much like we did with the Jobs Act in 2012 that I was a part of.”

Tornado Cash

On the topic of Tornado Cash and sanctions by U.S. Treasury, Rep. McHenry wasn’t a fan of the sanctions.  He said he believed that there were already “traditional means” in place for addressing bad actors such as North Korea who have used the mixing service to erase the identity trail for hundreds of millions of dollars worth of stolen digital assets. Furthermore, the congressman suggested that Treasury may have overreached with its sanctions, “Well, the way I originally looked at this is when you have code… that is speech. Code is speech according to a number of court cases. ”

The EO and Congress

McHenry was critical of governmental reports delivered in response to President Biden’s Executive Order thus far, saying he believed the overall tone has been unnecessarily negative and that the benefits should be embraced under the rule of law of The United States. He added, “I’d rather do that than having foreign imports of bad policy and bad regulation.”

Rejecting the Securities and Exchange Commission’s position on crypto regulation by enforcement,  Rep. McHenry made clear the next steps saying, “It is now the work of Congress in a bipartisan, bicameral way to actually do the hard work and give form to the digital asset ecosystem.”