House Approves Stablecoin Bill With 32-17 Vote

The House Financial Services Committee approved a stablecoin bill on Wednesday night, marking a significant step forward for the cryptocurrency industry. The bill, which had been stalled in Congress for years, gained new momentum due to the crypto industry's substantial spending in the 2024 election and President Donald Trump's enthusiastic support. The measure was passed with a 32-17 vote, with a few Democrats joining Republicans to advance it to the House floor for further consideration.

The bill, a key priority for the growing cryptocurrency sector, received bipartisan support despite the committee's rejection of provisions sought by the top-ranking Democrat. These provisions aimed to prohibit Trump and technology companies from issuing their own payment tokens. Additionally, a Democratic-backed amendment to prevent taxpayer bailouts of failing stablecoins was also rejected.

Stablecoins, which are crypto tokens designed to maintain a stable value pegged to traditional currencies like the US dollar, offer issuers the opportunity to invest reserves in short-term US Treasuries, generating yields. Major players such as Visa, PayPal, and Stripe are investing in stablecoin projects, recognizing their potential for global transactions that are faster and cheaper than traditional banking systems.

Under the proposed legislation, privately issued stablecoins would need to be fully backed by reserves in US dollars or assets like short-term government debt, overseen by state or federal regulators. Stablecoin companies profit from the interest earned on these reserves. Advocates of the bill argue that stablecoins present an opportunity for more efficient global transactions and that a federal regulatory framework is necessary to protect consumers while fostering industry growth.

Chairman French Hill of Arkansas emphasized the need for "guardrails, not roadblocks" for innovation. Trump has urged Congress to pass stablecoin legislation by August, and the Senate Banking Committee supported its version last month. The House and Senate must reconcile their bills and pass a single version to send it to Trump's desk for signature.

While the House and Senate bills share many similarities, they differ on specific details regarding state regulation, federal permitting, and restrictions on algorithmic stablecoins, which are not pegged to traditional currencies. Top Democrat Maxine Waters of California expressed concerns about potential conflicts of interest, particularly involving Trump and his family, and their involvement in crypto schemes. She argued that the bill could legitimize what she described as "blatant greed and corruption."

Despite these concerns, senior Democrat Gregory Meeks of New York supported the bill, citing the need for industry certainty and rules. Other Democrats also raised concerns about potential profits for Trump allies, including Elon Musk and Commerce Secretary Howard Lutnick, as well as tech giants like Amazon, Meta, and Walmart, which could engage in financial services traditionally handled by banks. Some bank groups have expressed worries that stablecoins could drain deposits from the banking system and reduce access to credit, while a major retailer lobby supports stablecoin legislation as a potential competitor to more expensive payment systems.