Pro-crypto Tennesse Republican Senator Bill Hagerty has released a discussion draft bill for stablecoin regulation. The draft legislation aims to provide clarity and includes a comprehensive framework for regulating and supervising stablecoin issuers.
Hagerty’s proposal mirrors the House of Representatives bill’s regulatory framework, the Clarity for Payment Stablecoins Act.
Sen Hagerty Laid Out Discussion Draft For Stablecoin Regulation
In an October 10 press release, US Republican Senator Bill Hagerty disclosed a discussion draft for stablecoin regulation. The proposed bill aims to establish a comprehensive framework to regulate stablecoin issuers.
Senator Hagerty explained the benefits of stablecoins in enhancing transactions and payment systems. He also noted that this digital asset class could create new demand for US Treasuries as the country navigates some challenges regarding sustainability.
Again, the Tennesse Republican lamented how the lack of regulatory clarity has limited the potential of stablecoins in the country. However, he believes his draft legislation will ensure regulatory clarity, address the lapses, and foster consumer security.
The senator stated: “For too long, these benefits and the broader promise of stablecoins have been hindered by the lack of clear. My draft legislation provides much-needed clarity, putting in place the legal framework necessary to unlock this technology’s full potential for the benefit of Americans.”
Meanwhile, Senator Hagerty’s draft legislation is similar to the bill that the House of Representatives is working on. The House bill, introduced by Rep. Patrick McHenry (R-N-C) and Maxine Waters (D-Calif), is tagged the Clarity For Payment Stablecoins Act.
Though Sen. Hagerty’s draft mirrors the House Bill, especially in its structural content, there is a slight difference. Hagerty’s bill distributes the federal supervisory role between the Federal Reserve and the Office of the Comptroller of the Currency.
While the Federal Reserve will oversee the banks and depository institutions, the latter’s regulation will focus on non-banking entities.
Further, Sen. Hagerty’s bill exempts stablecoin issuers with total coins below $10 billion from federal regulations. So, such issuers will only be under the regulatory jurisdiction of state regulators.
In addition, the bill allows issuers with more than the $10 billion threshold to seek a waiver from their federal regulator and remain only under state regulation.
Also, the proposed legislation recommends that stablecoin reserves maintenance be on a 1:1 basis with USD-based reserves.
US Lawmakers And Representatives Continue To Negotiate Stablecoin Bills
The US lawmakers and Representatives have been negotiating on possible stablecoin bills over the past few years.
House Services Chair McHency and Democrat Rep. Waters initiated a bill to establish a regulatory framework for stablecoins. Though the bill moved out of the Republican-led committee last year, it has not received much traction.
Initially, the bill proposed that state regulators solely approve stablecoin issuance without input from the Federal Reserve.
However, the bill was overturned at a congressional hearing in September 2024 after Rep. Waters suggested some changes. She proposed a dominant role for the Federal Reserve in stablecoin regulation.
Also, Rep. Waters suggested that stablecoins must maintain safe and liquid reserves, such as short-term Treasury bills, as their backing.
