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The Guidance - stablecoin laws
GM, Joanna here.
US lawmakers are hoping to get stablecoin legislation over the line this summer.
That’s unlikely. But the industry won’t have to wait too long.
2025 will be the year the US gets a stablecoin law, Jonathan Padilla told me.
Padilla worked on PayPal’s stablecoin as its head of blockchain strategy till June 2021. He is the founder of web3 company Snickerdoodle Labs.
Given Donald Trump’s lead in the polls, Padilla said there will likely be a Republican government in 2025, and Republicans “have a natural advantage” in the Senate.
There’s political will among Republicans — the main recipients of crypto industry donations — to get stablecoin rules done, Padilla said.
And Democrats are also doing their part to hammer out bills.
One bipartisan bill passed out of the House Financial Services Committee in July, and two Senators in the Banking Committee have just published a brand new one.
“The bills are ready, the arguments are stacked. If the Republicans take back the Senate, and they hold the House, this is an issue that can be solved in the first half of the year,” Padilla said.
The need for guardrails is more urgent than ever as the $159 billion stablecoin market is growing fast.
Aleks Gilbert reported on Ripple’s planned launch of a new coin, Ethena Labs’ capital raise funding a dollar-pegged stablecoin, and announcements from DeFi stalwarts Liquity and Reflexer about new iterations of stablecoins.
US lagging
Regulators worldwide are getting their heads around the stablecoin industry.
The EU’s Markets in Crypto-Assets regulation goes live in 2024, with stablecoin rules phased in first.
And the UK government has pledged its own stablecoin rules by mid-year.
In the US, there’s broad bipartisan agreement that laws are necessary for a growing industry and to combat dollar dominance threats posed by foreign central bank digital currencies, primarily Beijing.
Yet the US still doesn’t have any laws on the books.
A small chance
Democrats and Republicans have been split on basic issues, such as whether state or federal government should be the primary regulators of stablecoin issuers.
Still, there’s a small chance that the crypto industry gets the clarity it clamours for.
The House bill’s sponsors are reportedly negotiating to bundle up their bill into a piece of legislation that reauthorises aviation spending and must pass into law in May.
Similarly, Senate Banking head Sherrod Brown has said he’s open to doing the same thing with a Senate stablecoin bill.
But it’s unlikely these bills will pass in this Congress, especially in the bustle of an election year.
While Brown is sounding a positive note on stablecoin rules, they will still have to meet his standards. He’s a crypto sceptic who will push back on anything he sees as too lenient.
That leaves the industry looking to next year.
Email me [email protected], or Telegram @joannallama.
Crypto Movers and Shakers
After almost 30 years at the Internal Revenue Service — including as chief of its criminal investigation division — Jim Lee has joined Chainalysis as global head of capacity building.
Martin Grant, a former chief compliance and ethics officer at the Federal Reserve Bank of New York, has joined the board of Binance’s US arm.
Kathryn Haun said in a post on X she is to step down after seven years on Coinbase’s board to focus on her venture capital firm Haun Ventures.
Coinbase is looking for a lawyer “with deep understanding of capital markets regulations and digital assets.” The job pays up to $210,000. Nice.
Movers and Shakers is a new monthly feature in The Guidance. If you’re a legal, compliance, regulatory, or public affairs professional in crypto and making a career move, send a short bio and headshot to [email protected].
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Hong Kong police have frozen assets worth more than US$29 million and made more arrests in connection with JPEX, a cryptocurrency exchange that collapsed in September. The case illustrates the difficulties authorities face in reining in Hong Kong’s freewheeling crypto scene.
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