STABLE Act Pushes Forward, New Debate Over Donald Trump's Involvement with USD1 Stablecoin Emerges

The U.S. House Financial Services Committee has pushed forward the STABLE Act, a major step toward stablecoin regulations.

The U.S. House Financial Services Committee has taken a major step toward regulating stablecoins, with the approval of the STABLE Act sparking bipartisan reactions.

While the bill passed with a 32-17 vote and saw support from both sides of the aisle, it also ignited debate, particularly from Democrats who are raising red flags over Donald Trump's involvement with World Liberty Financial (WLFI) and its upcoming dollar-backed stablecoin.

The STABLE Act, which stands for Stablecoin Transparency and Bankless Offsets Now, is a bipartisan legislation introduced by Chair French Hill and Rep. Bryan Steil. It aims to regulate dollar-backed stablecoins, focusing on setting clear requirements for reserves, anti-money laundering standards, and a framework for reporting.

Lawmakers have highlighted the importance of the U.S. keeping pace with new technology, especially in the rapidly evolving field of blockchain.

The STABLE Act passed following a heated markup session, with 26 Republicans and six Democrats voting in favor, and 18 Democrats voting against it.

Many Democrats voiced their concern over Trump's involvement in cryptocurrency ventures. It was recently announced that WLFI, a firm backed by Trump, will be launching its own stablecoin, USD1, later this year.

This news comes as Trump has been actively engaging in the crypto space, recently selling NFTs and promoting memecoins like TRUMP.

Democrats are apprehensive about Trump potentially benefitting personally from the very regulations he may influence as president. They also expressed concern over the speed at which Republicans are pushing for legislation.

Despite the bipartisan support for the STABLE Act, several Democrats, including Maxine Waters and Stephen Lynch, spoke out against what they perceive as Trump’s self-interest and his history of engaging in ventures that later fail.

However, Republicans like Rep. Bill Posey countered that such claims are irrelevant and that Democrats are simply trying to stall the process.

The STABLE Act is still pending approval from the full House, although it is expected to pass without any issues, paving the way for a final bill to be forged with the Senate. Both chambers of Congress have been working on their own versions of legislation to regulate stablecoins.

Earlier this year, the Senate Banking Committee completed its own markup of the bipartisan STABLE Act, while the House Financial Services Committee also began working on a new bill.

However, the House committee's previous attempt to quickly pass a truncated version of the STABLE Act in March was met with resistance from Democrats who demanded a more comprehensive bill.

In addition to the STABLE Act, lawmakers also discussed other crypto-related topics.

One bill that sparked a partisan vote was an attempt to ban a U.S. central bank digital currency (CBDC). The vote on the bill to prohibit the Federal Reserve from issuing a digital dollar resulted in a 27-22 vote, with all 22 Democrats and five Republicans voting against it.

Lawmakers also discussed forming a task force to combat illicit cryptocurrency use and fraud. The Financial Technology Protection Act, which passed unanimously with a 32-0 vote, aims to create a joint state and federal task force to identify and prosecute those involved in crypto-related crimes.

Furthermore, House Democrats unveiled a bill to safeguard investors in private markets and adjust the Securities and Exchange Commission’s (SEC) leadership structure.

The bill, named the Investor Protection and Capital Markets Competitiveness Act, aims to provide greater protections for investors in private companies and startups, especially those participating in crowdfunding or administrative claims in bankruptcy.

It also seeks to streamline the SEC’s internal organization and leadership structure, concentrating administrative functions within the agency's administrative law judges.

The legislation is a key component of House Democrats' broader agenda to overhaul financial regulations and mitigate the risk of another economic crisis.

It builds upon previous efforts by the House Financial Services Committee to introduce bills focusing on specific aspects of capital markets regulation earlier this year.

These bills, which covered topics like variable annuities, robo-advisers, and climate risk reporting, are now being integrated into a more comprehensive bill.

Earlier this year, House Democrats passed a bill to regulate stablecoins and another to create a new agency for financial technology.

However, both bills were stalled in the Senate, and time is running out for both chambers of Congress to reach an agreement on financial legislation before the midterm elections in November.

With the House and Senate both working on their own versions of stablecoin bills, lawmakers will now work on merging them into a single version that can be finalized and approved by both chambers.

Once the two chambers agree on a final bill, it will be sent to President Joe Biden for his signature.

In other crypto news, Trump is expected to sign a resolution that overturns an Internal Revenue Service (IRS) rule targeting decentralized finance (DeFi).

The rule, which was part of a broader administrative law package signed by Biden in January, aimed to collect information from crypto exchanges on transactions above $60