A key Democrat on the House Financial Services Committee used a hearing on Tuesday as a chance to push for an 11th-hour compromise on stablecoin legislation.
The hearing also saw Republican members hammering Securities and Exchange Commission Chair Gary Gensler on his crypto oversight record and the agency’s reliance on enforcement actions to steer the industry.
U.S. Rep. Maxine Waters (D-Calif.), the House Financial Services Committee’s ranking Democrat, suggested in a Securities and Exchange Commission oversight hearing on Tuesday that she and the Republican chairman should finish a bill this year to regulate U.S. stablecoin issuers.
“I want us to strike a grand bargain on stablecoins and other long overdue bills,” Waters said to the committee’s chairman, Rep. Patrick McHenry (R-N.C.). “I strongly believe we can reach a deal that prioritizes strong protections for our nation’s consumers and strong federal oversight.”
McHenry, who is set to retire at the end of the year, responded that it’s his hope “that we can come to terms on stablecoin legislation this Congress,” though he noted, “the nature of how we do that is where things get a little tougher and the votes are a little tougher.”
“We’re running out of time to pass this,” Waters said. She and McHenry had previously worked for months on a compromise bill on stablecoin regulation, but a bipartisan effort hasn’t yet crossed the finish line. With the congressional session waning, the opportunity to shepherd legislation is dwindling.
The SEC hearing – unusual in its inclusion of all five commissioners testifying at once – quickly became a crypto debate as McHenry and others criticized the agency’s “reckless agenda” regarding the industry. Republicans specifically targeted Chair Gary Gensler’s track record.
“Under Chair Gensler, the SEC has become a rogue agency,” McHenry said. He lamented aggressive SEC crypto enforcement even as the House approved a widely bipartisan bill, the Financial Innovation and Technology for the 21st Century Act (FIT21), that showed that most of Congress disagreed with the agency’s approach to digital assets.
When questioned about the regulator using inconsistent phrases when addressing what makes a crypto security under SEC jurisdiction, Gensler responded that “it’s less about the terms; it’s more about the economics.”
“Words have meaning,” McHenry responded, arguing the agency is causing “a lack of clarity.”
Republican Commissioner Hester Peirce said that’s been a deliberate choice, against her will.
“We’re trying to be ambiguous, because the legal precision carries with it real implications,” she said, and the intentional murkiness has left uncertainty about how the agency is defining what qualifies a token transaction as a security. “We’ve fallen down on our duty as a regulator.”
Earlier this week, Republican lawmakers also demanded in a letter that the agency throw out its crypto accounting policy approach, known as Staff Accounting Bulletin No. 121 (SAB 121). The policy has left U.S. banks uncertain about taking custody of crypto assets because the policy suggests they’d need to maintain unusual levels of capital.