Investment bank TD Cowen: Bipartisan stablecoin bill is expected to reach an agreement, but there are currently political obstacles

Odaily Planet Daily News The Republican and Democratic leaderships in the United States have recently proposed their own ways to regulate stablecoins. French Hill, chairman of the House Financial Services Committee, released a draft legislation last week that mentioned giving the Office of the Comptroller of the Currency the power to "approve and supervise federally qualified non-bank payment stablecoin issuers" rather than providing a federal path through the Federal Reserve for "payment stablecoin issuers." On Monday, the committee's top Democrat, California Rep. Maxine Waters, released a discussion draft that included wording about federal regulators for stablecoins. Former CFTC Chairman Timothy Massad testified at a hearing on Tuesday, criticizing the Republican-led stablecoin bill and saying that the bill had some shortcomings, including weak standards for states and that the federal government would not conduct ongoing supervision of states, saying bluntly, "This is a recipe for chaos." Since 2022, Waters has been working with Patrick McHenry, a North Carolina Republican and current chairman of the House Financial Services Committee, to develop a regulatory framework for stablecoins. Last year, the Republican-led committee passed a bill. At the time, Waters called the bill “deeply problematic” because of a provision that would allow state regulators to approve stablecoin issuance without the Fed’s input. “I believe this legislation provides the best foundation to move forward with a federal framework signed into law,” Waters said Tuesday. In a prepared testimony, Ji Kim, president and acting CEO of the Crypto Innovation Council, said stablecoins are rapidly gaining popularity. Kim also called on Congress to intervene, “These efforts should establish requirements that stablecoin issuers must comply with, including appropriate registration, reserve requirements, redemption procedures, general prohibitions on rehypothecation, compliance with the BSA (Bank Secrecy Act), and more.” Investment bank TD Cowen said Hill’s discussion draft was “workable,” but said future negotiations could be partisan and not concluded until after Congress deals with expiring tax cuts at the end of the year. TD Cowen’s Washington research group, led by Jaret Seiberg, also said Waters’ bill would give the Fed power over non-bank issuers. “We think the Waters and Hill bills are close enough that a deal is feasible,” Seiberg wrote in a note Monday. “The hurdle is political, as President Trump is trying to shut down the Consumer Financial Protection Bureau, which makes it difficult for Democrats to reach a deal with Republicans. This is another reason we don’t think action will be taken soon.” (The Block)