Stablecoin regulation has taken a significant step forward with Sen. Bill Hagerty's recent draft legislation. The Tennessee Republican aims to create a comprehensive regulatory framework for stablecoins, closely resembling the Clarity for Payment Stablecoins Act currently under consideration in the House of Representatives.
In a statement released on Thursday, Sen. Hagerty emphasized that his draft provides much-needed clarity for the evolving crypto landscape. His proposal is positioned as Senator Hagerty’s version of the McHenry-Waters bill, which has been a central focus for House Financial Services Chair Patrick McHenry and Rep. Maxine Waters.
Sen. Hagerty, who serves on the Senate Banking Committee, has structured his draft to split federal oversight between the Federal Reserve for banks and the Office of the Comptroller of the Currency for non-banks. His draft bill contains a provision allowing issuers exceeding a $10 billion threshold to obtain a waiver, enabling them to remain under state jurisdiction.
Moreover, Hagerty's proposal emphasizes maintaining reserves on a one-to-one basis with reserves backed by U.S. currency. He noted, “Stablecoins have the potential to enhance transactions and payment systems, while also creating new demand for U.S. Treasuries.”
Negotiations surrounding stablecoin legislation have faced challenges in recent years. The bipartisan efforts from McHenry and Waters have been ongoing since 2022, but progress has been slow. Waters has previously critiqued aspects of the bill, highlighting the need for Federal Reserve input in stablecoin issuance.
However, recent congressional hearings suggest a shift, with Waters expressing a desire to reach a bipartisan agreement on stablecoins by year-end. She insists that the Federal Reserve should play a dominant role and that stablecoins must be backed by safe reserves.
