Waters' stablecoin draft sparks debate on federal oversight

House Financial Services Committee Ranking Member Maxine Waters has introduced a new discussion draft for stablecoin regulation, emphasising federal oversight.

This proposal adds to the ongoing legislative efforts from both Democrats and Republicans to establish a regulatory framework for stablecoins in the United States.

Waters' draft legislation assigns regulatory responsibilities to several federal agencies, including the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC).

The draft requires stablecoin issuers to maintain reserves on a one-to-one basis to ensure stability, and mandates the OCC, FDIC, and Federal Reserve oversee stablecoin issuers.

This approach contrasts with some Republican proposals that favor less federal intervention.

Republican lawmakers, including House Financial Services Committee Chair French Hill, have also put forward their own stablecoin regulation proposals.

These proposals generally give the OCC the authority to oversee federally approved nonbank stablecoin issuers, potentially opening the door for financial technology companies to enter the stablecoin market.

In the Senate, Senator Bill Hagerty introduced the "Guiding and Establishing National Innovation for U.S. Stablecoins" Act, aiming to create a national framework for stablecoin oversight with a focus on risk management and compliance standards.

Waters has called for bipartisan cooperation, noting that past efforts to pass stablecoin legislation have stalled.

Waters suggested that a 2024 stablecoin bill drafted by then-House Financial Services Committee Chair Patrick McHenry and her staff members would be preferable to other legislation.

Waters’ proposal builds on three years of bipartisan work and includes closing loopholes for issuers operating abroad and barring certain convicted fraudsters from working at stablecoin firms.

With competing proposals from both parties, negotiations in Congress are expected to continue.

The push for stablecoin regulation reflects its legislative priority under President Donald Trump's administration.