100+ Democrats support bill; signing ceremony set for Friday at White House; House also passes bill blocking Federal Reserve from issuing a digital currency

By a vote of 308-122, the House on July 17 passed a landmark bill (S. 1582) regulating a type of cryptocurrency called stablecoins, which are designed to match the value of another stable asset such as the U.S. dollar. The coins are often used to facilitate trades of other, more volatile digital assets such as Bitcoin. The bill, which drew the support of 102 Democrats, including Minority Leader Hakeem Jeffries (D-NY), represents the first time Congress has cleared a bill establishing regulation of digital assets, a priority for congressional Republicans and the Trump administration. A signing ceremony at the White House is planned for Friday, July 18.

The House also passed, by a vote of 219-210, HR 1919, the Anti-CBDC Surveillance State Act, which would block the Federal Reserve System from studying or implementing a central bank digital currency (CBDC). Only two Democrats supported the bill. The bill, sponsored by Majority Whip Tom Emmer (R-MN), was the subject of a two-day standoff on the House floor earlier this week as a faction of conservative Republicans demanded that the measure be merged with the crypto market structure bill (HR 3633) that also passed the House on Thursday. House GOP leaders ultimately reached an agreement in which they promised that the CBDC bill will be added to the must-pass National Defense Authorization Act (NDAA) later this year.

S. 1582, the GENIUS Act (for Guiding and Establishing National Innovation for U.S. Stablecoins) is sponsored by Sen. Bill Hagerty (R-TN), with several original cosponsors including Banking Committee Chairman Tim Scott (R-SC), Cynthia Lummis (R-WY), Angela Alsobrooks (D-MD) and others. The bill takes the approach of having federal regulators oversee larger stablecoin issuers, while smaller issuers could choose to be regulated by state-level agencies. Supporters of the bill said it would provide regulatory certainty for an emerging market and keep crypto trading from moving overseas, while boosting demand for the dollar and U.S. treasuries, because the bill requires stablecoins to be backed one-to-one by those or other safe assets.

Notably, because House Financial Services Committee Republicans did not have the opportunity to bring their own stablecoins regulation bill (the STABLE Act) to the floor and instead accepted the Senate-passed bill without changes, the separate crypto market structure bill (HR 3633) that the House also passed on July 17 includes a group of provisions that would reopen the stablecoins bill after it becomes law. Presuming these modifications remain intact in the final market structure bill, they would make changes related to nonfinancial stablecoin issuers, commodity-backed stablecoins and accounting requirements for issuers (see summary attached below).

Democrats supported the GENIUS Act in large numbers despite the opposition of Financial Services Committee Ranking Member Maxine Waters (D-CA), who gave a floor statement in which she criticized S. 1582 for not blocking President Trump's family crypto company from issuing a stablecoin. Waters, who in the previous Congress worked on a bipartisan stablecoins bill with former Financial Services chairman Patrick McHenry (R-NC), now retired, also said the bill "creates the appearance of a federal framework for stablecoins, but it does not provide the federal government with the full authority it needs to ensure all stablecoin issuers comply with the law. The bill also creates risks for consumers who will be stuck in a lengthy bankruptcy process if a stablecoin ever fails … Additionally, it leaves the door open for foreign firms that present a major national security threat, including targets of sanctions."

Additional information is available in the attached WCEY Alert.