Stablecoin Bill Faces Democratic Resistance Over Trump's Involvement

The House Financial Services Committee's markup of stablecoin legislation took an unexpected turn on Wednesday. Democrats spent hours emphasizing their support for the STABLE Act in principle, but expressed significant concerns over President Donald Trump's personal involvement in the stablecoin sector, citing it as an unacceptable conflict of interest.

Several Democrats, including a co-sponsor of the STABLE Act, proposed amendments to the bill that would prevent the president, his cabinet, the first lady, and special government employees from offering stablecoin products while in office. These amendments were unanimously rejected by the Committee's slim Republican majority through voice votes.

Republican leadership argued that the STABLE Act already requires all issuers to comply with the same rules, and that excluding certain issuers, even the sitting president, would hinder market competition. The Act aims to establish a set of regulations, including compliance with anti-money laundering laws and reserve audits, that all stablecoin issuers must follow to operate in American markets.

Committee Chair French Hill (R-AR) stated, “We're not picking winners and losers here. If you don't want to use a payment stablecoin, don't use one.” However, numerous Democrats disagreed with the notion that the Trump family’s recently announced stablecoin, the World Liberty Financial USD1 token, should be treated like any other.

Rep. Stephen Lynch (D-MA) countered, “He is unlike any other issuer because he's the president of the United States. And he's going to take U.S. taxpayer money to assist his family business when it gets in trouble.” Stablecoins are digital assets pegged to the U.S. dollar, allowing cryptocurrency traders to enter and exit positions without directly accessing dollars. Some issuers, like the Trump-backed World Liberty Financial, claim to strengthen U.S. dollar hegemony by promoting the use of dollar-backed assets in both foreign and digital asset markets. However, the legality of such products remains uncertain without a regulatory framework in the United States.

The Trump family’s crypto investments have sparked controversy since the president returned to the White House, where he is overseeing the creation of the nation’s first digital assets regulatory framework. The announcement of a stablecoin product by the Trump family, coinciding with the rapid progress of stablecoin legislation through both chambers of Congress, has particularly resonated with Democrats.

The timing of the announcement appears to have been unintentional. A source with direct knowledge of the matter revealed that World Liberty did not intend to launch its stablecoin so soon. The revelation of blockchain data concerning the product forced the team’s hand.

It remains uncertain whether the controversy over Trump’s crypto dealings will significantly impact bipartisan support for the STABLE Act, which was previously expected to garner a substantial number of Democrat votes. A House Financial Services Committee staffer stated that they do not anticipate much change in Democrat support for the bill following Wednesday’s markup.

However, on Monday, Rep. Hill, the Committee’s Republican chair, acknowledged that Trump’s crypto dealings, particularly his stablecoin and meme coin projects, have complicated the task of creating legislation in the same areas. Some Democrats already cosponsoring the STABLE Act, including Rep. Sam Liccardo (D-CA), issued strong rebukes of Trump’s crypto dealings on Wednesday. Liccardo emphasized the need to prevent high-ranking officials like Trump from offering their own stablecoins, highlighting the potential for such tokens to offer foreign actors a means to curry favor with the president.

Another House staffer familiar with the work of the House Financial Services Committee noted that Democrats who already cosponsored the bill embraced it last month as it was written then—and are unlikely to change their positions over tweaks that, while important, may not be existential. The staffer added, “You can connect the dots on what will happen if those amendments don’t get in.”