After unsuccessful past efforts to enact federal legislation regulating stablecoins, Congress has again turned to stablecoins. While it is always difficult to predict whether any bill will pass, there seems to be growing support in the current Congress, with the Senate Banking Committee and House Financial Services committee working closely together to adopt legislation.

In the Senate, a bipartisan bill entitled the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act is sponsored by Senators Bill Hagerty (R-TN), Tim Scott (R-SC), Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY). The bill defines a payment stablecoin as a digital asset used for payment or settlement that is pegged to a fixed monetary value. It would permit both bank and certain nonbank entities to issue payment stablecoins, and provides for either federal or optional state regulation, depending on the total amount of stablecoins issued. The bill makes clear that payment stablecoins are not securities subject to SEC regulation, and instead provides for banking-like examination, supervision and enforcement.

In the House, House Financial Services Committee Chair French Hill (R-AR) and Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee Chairman Bryan Steil (R-WI) announced a discussion draft of a bill entitled the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act. The bill is similar in many respects to the GENIUS Act in that it seeks to provide a path for the permitted issuance of payment stablecoins with regulation at either the federal or state level. A key difference between the GENIUS Act and STABLE Act is that while the GENIUS Act requires the Treasury Department to prepare a written study on “endogenously collateralized stablecoins,” also known as algorithmic stablecoins, the STABLE Act imposes a two-year moratorium on their issuance.