Vote on Stablecoin regulation pushed back by lawmakers

US House lawmakers are delaying consideration of a bipartisan bill aimed at reducing potential risks posed by so-called stablecoins, according to people familiar with the matter, pushing back a vote on the measure for at least Several weeks.

The potential deal would have marked the first major step in applying tougher rules to the cryptocurrency industry, which has grown with virtually no regulation. Biden administration officials and a bipartisan group of lawmakers worry that current laws do not provide comprehensive standards for new assets and have warned of potential risks to financial stability posed by stablecoins, a type of crypto. -currency intended to be pegged to the dollar or another national currency.

Lawmakers working on the potential deal between House Financial Services Committee Chair Maxine Waters and Patrick McHenry, the panel’s top Republican, were unable to complete work on the draft bill. law ahead of a committee vote tentatively scheduled for July 27, the people said.

That likely delays consideration of the package until at least September, when Congress is expected to return from its late summer break. Spokespersons for Waters and McHenry did not immediately respond to a request for comment.

Lawmakers and their staff worked through the weekend to try to resolve remaining policy issues with the legislation, which top Biden administration officials have been pushing for. By the morning of July 25, however, the bill was not finished and at least some key issues remained unresolved.

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These issues include standards for so-called custodial wallets, one of the people said. Treasury officials pushed for portfolio arrangements that Republicans were not comfortable with, the person said. Treasury officials provided assistance in drafting the bill but have not yet approved it.

During a July 22 call with Waters, Treasury Secretary Janet Yellen welcomed the work being done but did not endorse the bill, people familiar with the call said. One of the people said she needed to check with the White House, which has yet to publicly weigh in on the bill.

Policymakers fear that stablecoins could be vulnerable to massive withdrawals from investors if doubts arise over their ability to continue redeeming their tokens at a one-to-one ratio for official currencies. This could force stablecoin issuers to rush to liquidate their reserves, put downward pressure on asset prices and potentially damage broader financial markets.

But some regulators and bankers have expressed concern about how quickly the bill’s supporters had planned to vote on the measure in committee. The Independent Community Bankers of America, an influential lobbying force on Capitol Hill, on July 22 called on Waters to delay consideration of the bill, citing the need for input from bankers and other stakeholders.

Officials from the Securities and Exchange Commission and other regulators had also raised concerns about the bill.

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This article was published by Dow Jones Newswires, another brand of the Dow Jones Group