- Democrats decried Trump's 'conflicts of interest.'
- Republicans turned back numerous amendments.
- The Stable Act advanced out of committee.
Democrats assailed one of President Donald Trump’s crypto ventures at a marathon Congressional hearing on Wednesday.
They said the Republicans’ stablecoin bill in the House of Representatives would be a massive giveaway to the president, whose purported DeFi project, World Liberty Financial, recently announced plans to launch its own stablecoin, USD1.
“It’s a display of greed,” Representative Maxine Waters said, addressing Representative French Hill, the committee chair and a Republican from Arkansas.
“I attempted to talk to you last week, and what I really wanted was that we could agree that we not pass a bill that legitimises what is blatant greed and corruption.”
Trump’s complications
Waters’ comments came just two days after Hill told reporters that Trump’s myriad crypto ventures “complicated” lawmakers’ work to pass the bill.
Even so, members of the House Financial Services Committee advanced the bill Wednesday, with six Democrats voting in favour, according to Punchbowl News.
Dubbed the Stable Act, the bill would set guidelines for issuing so-called payment stablecoins.
Issuers would have to seek federal or state approval, back any stablecoins 1:1 with highly liquid assets such as cash, US Treasury bills, or bank deposits, and take measures to limit money laundering, sanctions evasion, and other financial crime.
In addition, the bill forbids issuers from paying yield on payment stablecoins and creates a two-year moratorium on so-called endogenously collateralized stablecoins.
Companion bill
Trump has vowed to make the US a “crypto superpower,” and he has asked congress to pass two landmark bills before year’s end: a stablecoin bill, and a so-called market structure bill addressing the regulatory status of most other cryptocurrencies.
Lawmakers are moving quickly: A companion bill in the US Senate, the Genius Act, was recently advanced from that chamber’s banking committee.
It’s unclear how the two bills would be consolidated if they both win approval. Crypto supporters are hopeful Trump can sign something into law before the August recess.
On Monday, however, Hill told reporters the Trump family’s burgeoning crypto empire “made our work more complicated.”
Those ventures include a memecoin, World Liberty Financial, a new crypto exchange-traded fund, and, most recently, a Bitcoin mining business.
Critics say those ventures pose a conflict of interest, given the Trump administration’s work on relaxing regulations for the industry.
Democrats spent much of Wednesday’s 10-hour debate over the Stable Act highlighting that issue.
The focus on the Trump family’s crypto ventures is a new front. In recent debates, Democrats such as Senator Elizabeth Warren have focused on other bad actors who use stablecoins such as Tether’s USDT, including terrorists and fentanyl traffickers.
They also criticised the bills as handouts to Elon Musk and “crypto bros.”
Dangerous precedent
Waters, a Democrat from California, said she would not support the bill without an amendment that would “prevent the president from using this legislation to unjustly enrich himself.”
“This committee is setting an unacceptable and dangerous precedent,” she said.
An amendment barring the government from using or accepting stablecoins affiliated with the president, vice president, or members of Congress failed in a voice vote.
‘It is inappropriate for the president’s family to announce their intention to launch a stablecoin.’
— Representative Gregory Meeks
“We live in a democracy. We’re not picking winners and losers here. If you don’t want to use a payment stablecoin, don’t use one,” Hill said in urging his colleagues to reject the amendment.
“I don’t believe this amendment is necessary.”
To be sure, some Democrats have supported the Stable Act.
“It is completely inappropriate for the president’s family to announce their intention to launch a stablecoin while he is still in office,” Representative Gregory Meeks, a Democrat from New York, said.
“However I looked at this, and I said, ‘stablecoins are here to stay.’ And as I’ve said before, it’s our responsibility to establish clear rules with a high regulatory standard for issuers to meet.”
Democrats attempted — and failed — to pass dozens of other amendments, including those barring stablecoin issuers from receiving government bailouts, limiting their issuance to so-called permissioned blockchains, and requiring formal audits of stablecoin issuers.
Republicans parried the attempts, saying the proposed amendments were unnecessary or better saved for the upcoming market structure bill.
Core principles
Representative Warren Davidson, a Republican from Ohio, introduced two amendments of his own, including one that would create a right to self-custody of cryptocurrencies.
“Self-custody embodies the core principles and the core promise of decentralised finance, Davidson said.
It got the same treatment as the Democrats’ amendments.
“Self custody is certainly something that’s an important part of our agenda,” Hill said. “But I do believe that it best fits in market structure.”
The first hearing on that bill is scheduled for April 9.
Aleks Gilbert is DL News’ New York-based DeFi Correspondent. You can reach him at aleks@dlnews.com.
