House Passes STABLE Act Amid Trump Crypto Controversy

The U.S. House of Representatives has passed the STABLE Act, a significant legislative measure aimed at regulating stablecoins. The bill, which gained bipartisan support, seeks to address concerns about the potential risks associated with stablecoins, including their impact on financial stability and consumer protection. The STABLE Act establishes a clear framework for dollar-backed stablecoins, enforcing reserve requirements and anti-money laundering standards. Lawmakers emphasized the importance of keeping pace with blockchain technology to maintain global competitiveness.

The passage of the STABLE Act comes amid growing scrutiny of Donald Trump's involvement in the crypto industry. Trump's family has been linked to World Liberty Financial (WLFI), a decentralized finance (DeFi) venture that plans to launch USD1, a US dollar-pegged stablecoin. The Trump family has assumed majority control of WLFI, securing 75% of net token sale revenues and 60% of future business operations, which entitles them to roughly $400 million in fees. This has raised concerns about potential conflicts of interest and the influence of political ties on crypto regulation.

Democratic lawmakers, including Senator Elizabeth Warren and Representative Maxine Waters, have called for transparency regarding Trump's involvement in the crypto sector. They have requested that the U.S. Securities and Exchange Commission (SEC) preserve and provide records related to WLFI and Trump's financial ties to the project. The lawmakers have also questioned the SEC's handling of its recent case against Justin Sun, a major investor in and advisor to WLFI, and the regulator's enforcement actions under the current administration.

The debate over stablecoin regulation has intensified as lawmakers grapple with the potential risks and benefits of these digital assets. The STABLE Act seeks to address these concerns by establishing a framework for the issuance and use of stablecoins, including requirements for reserve backing and disclosure. However, some lawmakers have expressed concerns about the potential for political entanglements in crypto regulation and the need for greater transparency and accountability.

Despite the controversy, Republicans are pushing to finalize stablecoin regulations by August. Committee Chairman French Hill emphasized the need for “guardrails, not roadblocks” to bring innovation. Democrats, including Maxine Waters and Stephen Lynch, countered by accusing Trump of using his presidential influence for personal gain, a charge Republicans brushed off as unnecessary. This wasn’t the only crypto-related debate in Congress. Alongside the stablecoin bill, lawmakers discussed banning a U.S. central bank digital currency (CBDC) and establishing a task force to combat illicit crypto activities. The Financial Technology Protection Act, aimed at tackling crypto crime, passed unanimously, while the anti-CBDC bill saw a split vote of 27-22.

With the House and Senate both advancing stablecoin bills, lawmakers will now work on merging them into a single version for final approval. Meanwhile, Trump is expected to sign a resolution that overturns an IRS rule targeting DeFi, marking another win for the crypto industry. Whether stablecoin regulations will pass before the elections and what role Trump will play remains to be seen. The passage of the STABLE Act is a significant development in the ongoing debate over crypto regulation. As the U.S. continues to grapple with the potential risks and benefits of digital assets, lawmakers will need to balance the need for innovation with the need for consumer protection and financial stability. The outcome of this debate will have important implications for the future of the crypto industry and the role of stablecoins in the global financial system.