Last week while I was attending the Meritocracy: America Innovation Forum I listened in to a talk by two members of Congress about a stablecoin bill that was supposed to drop that day (if you have not read it you can find it here). Instead of the Republican side dropping theirs it later appeared that significant bipartisan progress had been made and that this week it would be introduced. I went into the weekend pretty optimistic about the rumors I was hearing as a bipartisan bill would be able to move through Congress much much faster than one that only had a single party behind it. Well, I hate to be the one to break it to y'all but this lays at the feet of two people and they are not who many would expect. The parties at fault are Financial Services Chairwomen Maxine Waters, who has suffered from several leaks during the drafting process, and Treasury Secretary Janet Yellen.

Since the Chair leads the committee it is on them when leaked drafts occur. The leaks that have occurred from the Majority's side either were purposely done to gauge banks' support or show that within the committee there is an issue that needs to be addressed. When either side leaks part of draft legislation it can cause a huge fallout that risks the ability of the committee to pass bipartisan legislation. Based solely on these leaked proposals banking lobbyists have been beating down the committee's doors under the guise that this would not protect the financial system from risk. It also got the Treasury Secretary involved which was almost certain to cause issues. 

Sec. Yellen reached out and was in communication with her Democratic colleagues over the weekend and as a result of trying to appease the Treasury the rift grew between the Democratic and Republican sides and has resulted in the legislation being punted for at a minimum 4 weeks. As someone who works in Congress on a committee, I can attest to the absolutely grinding nature of everything that goes on and the crazy hours that can result. I knew when I took the job it wouldn't be a cakewalk and a huge way that committee staffers can handle the crazy schedule is because for the month of August the House of Representatives is in recess allowing us to be able to either visit family and friends or travel. Since this legislation is not going to be Marked Up which means it moves from the committee to the House floor for a possible vote it will not be addressed until September. At that point priorities in the House and the country, overall could dramatically change pushing stablecoin legislation to the back of the line. 

Naturally, the issues the two sides face in this legislation are what you would expect. The Democrats would like to treat stablecoin issuers like banks and thus make them hold significant reserves and deal with the layers and layers of regulation that lie there and the Republicans who favor a more limited approach to regulating stablecoins and importantly are not for holding them to the same standards that traditional banks are held at. While it might sound like an insurmountable issue that is not the case as both sides have plenty of wiggle room to give up some of their wants to secure some of their needs. It is disappointing that this is the result as the closer we get to mid-term elections the more likely it is that significant legislation is not passed as the incumbents hit the campaign trails especially since redistricting has occurred. 

In September there will be a brief window for legislation to be hashed out and passed but again the delay is a huge issue as we have no idea what the priorities of the country will be at that time. Right now there was a lull that allowed Congress to address this issue so since it is getting burned it is concerning that it will not get addressed this Congress. Depending on how the mid-terms play out as well it could result in a huge reset being hit at the start of next year and legislation will have to once again be hashed out. With various possibilities out there including a divided Congress it could be a huge headache to get certain things passed by Congress.  

Hopefully, after August recess during the brief window of opportunity, the two sides can finish up the legislation that they have planned and not let outside influences tank the legislation. This has been pointed to by the President's crypto directive to be addressed and so it should be on a bipartisan basis and without the pressure of banks or the executive branch. For now though we will just have to sit back and wait. 

Please know I am not a financial advisor and make sure you do your own research! If you enjoyed this article and would like to further support me below are a few referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_

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