Lawmakers call for stablecoin regulation, criticize SEC’s enforcement approach
Congresswoman Maxine Waters, the leading Democrat on the House Financial Services Committee, called for a bipartisan agreement on stablecoins by the close of 2024.
During a committee hearing on Sept. 24, Waters expressed optimism that a legislative deal could be achieved, emphasizing the need for robust federal regulations and consumer protections as part of the final framework.
Waters said:
“Mr. Chairman, before the end of this year, I want us to strike a grand bargain on stablecoins and other long-overdue bills. Since 2022, we’ve been working tirelessly to reach an agreement and have both made concessions.”
Stablecoin bill
Waters and Republican Rep. Patrick McHenry, the committee chair, have been collaborating on a bill to regulate stablecoins since 2022, with the goal of creating a robust regulatory foundation for the industry.
The committee advanced a version of the bill in 2023, but it has struggled to gain wider support due to disputes over provisions allowing state regulators to approve stablecoins without the Federal Reserve’s input, a measure Waters described as “deeply problematic.”
Waters stressed the importance of stablecoins being backed by secure reserves, such as short-term Treasury bills, to ensure their stability. She also emphasized the need for the Fed to maintain a key supervisory role, similar to frameworks in other countries.
McHenry expressed hope for progress on stablecoin legislation while also calling for broader regulatory clarity around digital assets. He said he’s “optimistic” about stablecoin regulation and hopes that it will lead to “much-needed clarity on digital assets.”
With the end of the legislative session approaching, Congress must pass significant bills soon. McHenry also noted that his separate crypto market structure bill, known as FIT21, could gain momentum before the year concludes.
Commissioners testify
The hearing also featured testimony from all five US Securities and Exchange Commission commissioners, including Chair Gary Gensler and Commissioner Hester Peirce.
Lawmakers focused their questions on the agency’s handling of digital assets and broader rulemaking issues, with Republicans criticizing the SEC’s “regulation by enforcement approach” and questioning whether the regulator was capable of providing regulatory clarity for the industry.
Peirce agreed with the lawmakers’ criticism of the agency’s ambiguous approach to digital asset regulation and stated that the SEC has the tools to provide clear guidelines but has failed to do so.
She said:
“We’ve [SEC] taken a legally imprecise view to mask the lack of regulatory clarity… We can provide guidelines and choose not to.”
Peirce further emphasized that the SEC’s vague stance on token classification creates confusion in the market. She argued that the agency should have clarified that the tokens themselves are not securities, which would help guide secondary sales and platform listings.
Other commissioners echoed Peirce’s concerns, with Mark Uyeda noting that the SEC has a wide range of tools available to address the regulatory gaps, including defining standards for token classification and crypto-related exchange-traded products.
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