Lawmakers race to release draft of stablecoin bill ahead of August recess

US House of Representatives lawmakers could introduce draft text of a stablecoin bill as early as this week, a last-ditch effort to keep regulation front-of-mind ahead of the August recess. 

Lawmakers are working on a discussion draft of the legislation, according to four people familiar with the plan. The move comes as a stablecoin regulation deal between House Financial Services Committee Chair Maxine Waters, D-Calif., and ranking Republican Rep. Patrick McHenry, R-N.C., has stalled on Capitol Hill. 

The bill came as a surprise to many in DC last week, though Waters and committee Democrats were said to be working on a broader crypto package.

House lawmakers had initially planned to release a full stablecoin regulation bill this week, but negotiations have seemingly stalled. Those involved apparently had hashed out standards for acceptable reserves to back fiat-pegged stablecoins. Sources familiar with the negotiations noted that it was a Treasury-brokered deal that would allow non-banks to issue stablecoins — which would go against its earlier push to limit issuance to FDIC-insured financial institutions.

The move displeased committee progressives. Meanwhile, several Republicans were unhappy with McHenry’s team cutting them out of negotiations, as well as broader concerns about federal preemption of state regulatory authorities. 

If a draft is not released in the coming days, those involved fear stablecoin regulation efforts will lose momentum by the time lawmakers return to the Capitol in September, one source said. Lawmakers had not settled on the final text of a discussion draft as of Monday afternoon.

Representatives for Waters and McHenry did not reply to requests for comment. 

The end-of-summer recess, a time when lawmakers head back to their districts and often campaign ahead of the midterm elections, begins August 1 and lasts through Labor Day. When the House returns this fall, lawmakers will still be in a race against the clock to pass legislation before the November election. 

If the stablecoin push is unsuccessful, it won’t be the only crypto-related bill to stall in Congress this year. Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., acknowledged last week that their sweeping crypto regulation bill is unlikely to get a vote ahead of the midterms.