A House Financial Services Committee markup of stablecoin legislation appeared to go off course Wednesday, with Democrats spending hours hammering home the same message: Democrats would in principle support the STABLE Act, but see President Donald Trump’s personal involvement in the stablecoin sector as an unacceptable conflict of interest.
Multiple Democrats, including a co-sponsor of the STABLE Act itself, offered amendments to the bill on Wednesday that would have prevented the president, his cabinet, the first lady, and special government employees like Elon Musk from offering stablecoin products while in office.
One by one, over the course of hours, those amendments were shot down by voice vote the Committee's slim Republican majority.
Republican leadership countered the proposals by arguing the STABLE Act currently requires all issuers to comply with the same rules, and that boxing out certain issuers—even the sitting president himself—would stifle market competition. The Act would create a set of rules, involving compliance with anti-money laundering laws and reserve audits, that all stablecoin issuers would have to comply with to operate in American markets.
“We're not picking winners and losers here,” Committee Chair French Hill (R-AR) said. “If you don't want to use a payment stablecoin, don't use one.”
Numerous Democrats took issue with the position that the Trump family’s recently announced stablecoin, the World Liberty Financial USD1 token, should be treated like any other.
“He is unlike any other issuer because he's the president of the United States,” Rep. Stephen Lynch (D-MA) retorted. “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 that allow cryptocurrency traders to enter and exit positions without the need to access dollars directly. Some stablecoin issuers, like the Trump-backed World Liberty Financial, purport to strengthen U.S. dollar hegemony by encouraging the use of dollar-backed assets in both foreign and digital asset markets. But absent a regulatory framework in the United States, the legality of such products remains in question.
The Trump family’s lucrative crypto investments have caused some controversy ever since the president returned to the White House, where he is currently overseeing the creation of the nation’s first ever digital assets regulatory framework. But the Trump family’s announcement last week of a stablecoin product—right at the moment that stablecoin legislation is moving quickly through both chambers of Congress—appears to have struck a particularly resonant chord with Democrats.
The timing appears to have been inadvertent. A source with direct knowledge of the matter told Decrypt that World Liberty did not intend to roll out its stablecoin so soon. The revelation of blockchain data concerning the product, though, appears to have forced the team’s hand.
It remains unclear whether the flare up over Trump’s crypto dealings will meaningfully change the calculus when it comes to bipartisan support for the STABLE Act, which has until now been widely expected to earn a fair number of Democrat votes. One House Financial Services Committee staffer told Decrypt Wednesday they do not anticipate much has changed after today’s mark up, in terms of Democrat support for the bill.
And yet on Monday, Rep. Hill, the Committee’s Republican chair, took the rare step of conceding that Trump’s crypto dealings—particularly, the president’s stablecoin and meme coin projects—have made the task of creating legislation in the same areas “more complicated.”
Some Democrats already cosponsoring the STABLE Act, including Rep. Sam Liccardo (D-CA), issued forceful rebukes of Trump’s crypto dealings on Wednesday. Liccardo said the need to prevent high-ranking officials like Trump from offering their own stablecoins was “self-evident and obvious,” and highlighted 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 told Decrypt, however, 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.
“You can connect the dots on what will happen if those amendments don’t get in,” the staffer said.
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