The House Financial Service Committee has postponed its long-awaited stablecoin bill to September after objection from Treasury Secretary Janet Yellen. This will delay congressional discussions on this topic until after the August recess ends on September 5.
Doubts Regarding Custody
The legislation negotiated between committee chair Maxine Waters and Patrick McHenry was initially scheduled for draft on Wednesday, July 27. The intention is that banks can issue stablecoins, and non-banks can do so under the supervision of the Federal Reserve.
However, the legislative framework has raised doubts among the Independent Community Bankers of America and the US Treasury. Secretary Yellen called Waters on Friday to raise concerns about how it would manage stablecoins held in custody on behalf of consumers.
The Treasury reportedly suggested that legislation requires wallet custody providers to segregate customers’ assets so they will be preserved in the event of bankruptcy.
Stablecoins Take Priority
Stablecoins are arguably the biggest blockchain innovation on the radar of both Washington and the Federal Reserve. Both Waters and McHenry named stablecoins a top priority after the President’s Working Group report’s on assets in November.
The Central Bank has also been exploring the central bank’s digital currency (CBDC) as a possible alternative partner to stablecoins.