The House Financial Services Committee passed a payment stablecoin bill called STABLE on Wednesday night with a bipartisan 32–17 vote. While this marks early progress on stablecoin legislation, TD Cowen warns that significant hurdles remain that may delay full enactment.
These hurdles include the U.S. President Donald Trump family's crypto ventures, efforts to tie the bill to Elon Musk and his plan to turn X (formerly Twitter) into a payments platform, objections from state regulators and how to handle Tether and other stablecoins based outside the U.S., TD Cowen's Washington Research Group, led by Jaret Seiberg, wrote in a note on Thursday.
"The faster these questions are resolved, the more optimistic we can get," Seiberg said.
During Wednesday's lengthy House Financial Services Committee hearing, Rep. Maxine Waters, the committee's top Democrat, opposed the stablecoin bill and raised concerns over Trump's involvement in crypto.
"If there is no effort to block the President of the United States of America from owning his stablecoin business just as he owns crypto, which is his largest asset now, I will never be able to agree on supporting this bill," Waters said. "And I would ask other members not to be enablers allowing the President of the United States to get with this."
Citing Waters and other Democrats' concerns, Seiberg said that the Trump family's involvement with crypto continues to be a political problem for payment stablecoin legislation.
"The legitimacy of this concern does not matter," he added. "It could become an effective argument against the bill."
Democrats are also attempting to link the legislation to Elon Musk's ambitions to turn X into a financial platform.
"Your very own co-president Elon Musk could also launch his own stablecoin on X under this bill," Waters said during the Wednesday hearing, arguing that the move could erode the separation between banking and commerce and raise consumer risks.
"We believe this effort to tie the stablecoin bill to Trump and Musk is a political roadblock, but one that can still be overcome given how many Democrats are supportive of the need to enact a stablecoin bill even if they don't agree with all the details," Seiberg said.
Beyond political concerns, significant policy disagreements also remain as the two stablecoin bills — STABLE and GENIUS — "are similar but not identical," Seiberg said. Lawmakers are still divided on how to balance state and federal oversight of stablecoin issuers, whether Congress should bar the Federal Reserve from using its emergency powers in the event of a stablecoin collapse and how to address foreign stablecoins such as Tether, Seiberg noted.
He also said stronger anti-money laundering and Bank Secrecy Act (AML/BSA) controls may be necessary to provide political cover for lawmakers to support the bill.
"We continue to believe floor action in either chamber is not imminent though the bipartisan votes in both committees tell us there is a path for this to move before the August recess," Seiberg concluded.
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