U.S. Senator Bill Hagerty is taking the next step in stablecoin regulation by building on the foundation set by Representative Patrick McHenry. Hagerty has introduced a discussion draft of the Clarity for Payment Stablecoins Act of 2024, which refines McHenry’s 2023 stablecoin bill. McHenry, a longtime advocate for stablecoin regulation, is set to retire at the end of his current term.
Key Differences in Hagerty’s Bill
Hagerty, a member of the Senate Banking Committee, acknowledged the influence of McHenry’s previous bill but highlighted several key differences in his statement.
One notable change is a new section called State-Level Regulatory Regime, which was not part of McHenry’s version. In this section, Hagerty proposes that stablecoin issuers with less than $10 billion in market capitalization can be regulated by state authorities. For larger issuers, there’s an option to seek waivers to continue operating under state regulations instead of being subjected to federal oversight.
Hagerty’s bill also alters the role of federal agencies in supervising some stablecoin issuers. He noted, “These key provisions and other technical modifications strengthen the state pathway to stablecoin issuance, establishing a tailored regulatory regime that most effectively facilitates innovation and protects consumers.”
Bipartisan Support for Stablecoin Legislation
McHenry’s 2023 bill received bipartisan support in the House Financial Services Committee, although negotiations are ongoing. Committee member Maxine Waters expressed her satisfaction with the progress, saying:
“Before the end of this year, I want us to strike a grand bargain on stablecoins and other long overdue bills. Since 2022, we have been working for hours on end to reach an agreement and have each made concessions.”
Waters also emphasised the important role of the Federal Reserve Board in overseeing stablecoin regulation.
Hagerty’s Stablecoin History
In 2022, Hagerty introduced the Stablecoin Transparency Act, which classified stablecoins as securities. However, the current 2024 bill takes a different approach and does not classify stablecoins as securities. The previous bill did not advance past the Senate Committee on Banking, Housing, and Urban Affairs.
Another major stablecoin bill, the Lummis-Gillibrand Payment Stablecoin Act, is also under consideration. At 179 pages, it’s more than triple the length of the McHenry and Hagerty bills. It is still being reviewed by the Senate Committee on Banking, Housing, and Urban Affairs.
Senator Hagerty is currently accepting comments on his draft bill until November 1, 2024. This feedback will help shape the final version of the legislation.
