A key committee in the US House of Representatives has taken an important step toward regulating stablecoins—digital currencies tied to real-world assets like the US dollar.
Lawmakers on the House Financial Services Committee have approved a bill called the ‘Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act’.
This bill aims to bring clear rules for stablecoins such as USD Coin ($USDC) and Tether ($USDT). It will now move forward to be voted on by the full House of Representatives.
However, the bill has sparked a political debate, with some Democratic lawmakers raising concerns about former President Donald Trump’s involvement in the crypto industry.
The Senate has already passed a similar bill. If both the House and Senate approve their versions, they will work together to create a final law, with hopes of completing it before August.
Lawmakers debate Trump’s role in crypto
On 2 April, the House Financial Services Committee voted 32-17 in favour of the stablecoin bill. This included support from 27 Republicans and 5 Democrats. Before the vote, lawmakers debated possible changes to the bill, and some Democrats strongly opposed it.
A major reason for this opposition is Trump’s indirect connection to a stablecoin project. Just a week before the vote, a company linked to Trump, called World Liberty Financial (WLFI), introduced a new stablecoin called USDI.
Trump has also been active in the crypto space by selling non-fungible tokens (NFTs) and promoting a memecoin called $TRUMP.
Some Democratic lawmakers worry that Trump and his allies could benefit financially from the bill. Representative Maxine Waters accused Trump of using his position to make money from cryptocurrencies, calling it “greedy”.
Representative Stephen Lynch also raised concerns. He warned that if Trump became president again, he could influence the regulators who oversee stablecoins, possibly to help his own business interests. Lynch argued that Republicans would oppose this situation if it involved a Democratic president instead.
Another concern came from Representative Sean Castin, who pointed out that Justin Sun, who is the founder of the Tron blockchain, has invested millions in WLFI. Castin suggested that foreign investors could use digital currencies like USDI to quietly influence US policymakers.
However, Republicans disagreed with these concerns. Committee Chairman, French Hill, said the bill was about creating fair rules for the stablecoin industry, not about stopping innovation.
Representative Bill Huizenga also dismissed the objections, saying that state regulators already have enough power to oversee stablecoins under the bill.
Other crypto laws also move forward
Alongside the stablecoin bill, lawmakers discussed other cryptocurrency-related laws. One of these new proposals is aimed at fighting illegal activities in the crypto space.
The committee voted unanimously (49-0) in favour of creating a task force to monitor the use of cryptocurrency in criminal activities.
Another law focuses on the idea of a US central bank digital currency (CBDC). Some lawmakers want to block the development of a CBDC, fearing it could give the government too much control over digital money. The committee passed this bill with 27 votes in favour and 22 against.
Lawmakers are also watching an upcoming decision about how the Internal Revenue Service (IRS) taxes transactions in decentralised finance (DeFi).
If Trump signs a resolution cancelling an IRS rule on DeFi, it would mark the first-ever crypto law passed by Congress. A signing date has not yet been confirmed, but supporters expect it to happen soon.
What’s next for the stablecoin bill?
Now that the stablecoin bill has passed the House Financial Services Committee, it will be presented for a full House vote. If it passes there, the Senate and House will need to negotiate a final version before it can become law.
The bill requires that stablecoins be fully backed by real assets, such as US dollars or short-term government debt. It also places stablecoin issuers under state or federal oversight.
Supporters believe that stablecoins offer faster and cheaper transactions than traditional banking. They argue that clear regulations will help protect consumers while encouraging crypto businesses to stay in the US instead of moving overseas.
During debates, some Democratic lawmakers proposed banning Trump, his family, and large tech companies from launching their own stablecoins. They also wanted to prevent taxpayer money from being used to bail out failing stablecoin companies. However, Republicans rejected these proposals.
Hill defended the bill, stating, “Innovation needs guardrails, not roadblocks”. He and other supporters believe that stablecoins could modernise cross-border payments and reduce the world’s dependence on traditional banking systems.
The Senate passed a similar stablecoin bill last month through the Senate Banking Committee. Lawmakers now need to compare the two bills and make necessary adjustments before they can be merged into a single law.
One major disagreement is whether to allow algorithmic stablecoins—a type of stablecoin that is not backed by real-world assets like the US dollar.
Another debate is about whether stablecoins should be regulated at the state level or federal level. Most lawmakers agree that strong safeguards are necessary to protect the financial system.
Representative Gregory Meeks, a senior Democrat, voted in favour of the bill despite concerns over Trump’s involvement. Meeks stressed the importance of clear rules to help the crypto industry grow safely while ensuring proper regulations are in place.
Mixed reactions to the bill
The banking industry has expressed concerns that stablecoins could reduce bank deposits, making it harder for banks to offer loans to customers.
Meanwhile, major retail groups support the bill because they see stablecoins as a cheaper alternative to credit card payments.
The House Financial Services Committee’s vote on 2 April officially moves the STABLE Act to the House floor for further debate. The bill was first introduced in February by Chairman French Hill and Bryan Steil, the Chair of the Digital Assets Subcommittee.
Reports suggest that the bill was drafted with input from Tether, the world’s largest stablecoin issuer.
During earlier discussions, Representative Maxine Waters criticised the bill, calling it “an unacceptable and dangerous precedent”. She warned that Trump could use the bill to allow his family’s stablecoin to be accepted for government payments, benefiting his business interests.
Meanwhile, World Liberty Financial recently launched its USD1 stablecoin, adding to concerns about political influence in crypto. Reports also suggest that the US Housing Department is considering using stablecoins for some of its financial activities.
Other stablecoin-related bills are also making progress. The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act was passed by the Senate Banking Committee in an 18-6 vote in March. This bill introduces more oversight and stricter reserve rules for stablecoin issuers.
Democratic Senator, Kirsten Gillibrand, supported changes to the GENIUS Act, saying it improved consumer protections and strengthened issuer regulations.
Both the STABLE Act and GENIUS Act will now wait for debate in the House and Senate, before moving to a final vote.
Crypto journalist, Eleanor Terrett, reported that some crypto industry lobbyists are working behind the scenes to align the two bills. The goal is to make sure both versions match closely, avoiding the need for a special negotiation committee.
As the political debate over stablecoins continues, lawmakers and industry experts are watching closely to see how the final version of the bill will shape the future of stablecoin regulation in the US.
