The ‘Stablecoin Bill’ has deep waters behind it not just a power struggle between the two parties, but a tug-of-war between the federal and state governments.

Author: Leo Schwartz, Fortune Crypto Translation: Babywhale, Foresight News

Translator’s Note: On the evening of July 27th Beijing time, it was reported that the US House of Representatives failed to reach a bipartisan agreement on stablecoin legislation. Patrick McHenry, the chairman of the Financial Services Committee, stated that negotiations have reached an impasse due to opposition from the White House. Democratic leaders, on the other hand, stated that it was McHenry who halted the negotiations. Then, at noon on July 28th Beijing time, the US House of Representatives Financial Services Committee tweeted that the committee has passed the “Payment Stablecoin Transparency Act”.

Although the Financial Services Committee of the House of Representatives did create some memorable moments last week, legislation is not always smooth sailing.

Commentators afterwards believe that the two bills passed by the Financial Services Committee of the House of Representatives, one regarding regulation of the cryptocurrency market structure and the other regarding stablecoins, received moderate support from both parties, which is a significant victory. To some extent, this is true, because the core political goal of the industry is legalization, and both direct regulation and legislative recognition of regulation are necessary.

Legislation on market structure always seems elusive, and the above situation seems to be true as well – the passage of this bill is an important step in advancing the dialogue, overcoming obstacles that others have encountered.

We can’t say that the stablecoin bill has failed, because the stablecoin bill has always been the most likely legislative effort, with then-chairwoman Maxine Waters (Democrat, California) and Congressman Patrick McHenry (Republican, North Carolina) coming close to reaching a final version last year. Their roles changed this year, but they still seem to be intent on pushing for legislation. And when Patrick McHenry proposed a version involving only Republicans earlier in this session, observers attributed Maxine Waters’ frustration to political maneuvering.

However, during the discussion process of the two bills, the stablecoin bill was more controversial and received less support in the end. Although a few Democrats voted in favor, the majority expressed opposition in increasingly heated hearings. As mentioned by Pedersen on his Twitter.

According to McHenry, the main obstacle comes from the White House. Subsequent reports show that the debate over stablecoin regulation has revolved around whether to prioritize state-level regulation or federal-level regulation. The Biden administration, especially National Economic Council Chair Lael Brainard, advocates for federal-level priority (the Republican version still establishes a federal baseline for stablecoin regulation).

What’s remarkable about this division is that it doesn’t stem from partisan competition. Recall that the only comprehensive oversight of stablecoins in the United States is in New York, thanks to the New York Department of Financial Services. Earlier this year, Adrienne Harris, the Democratic-appointed superintendent of the New York Department of Financial Services, testified at the House Financial Services Committee, advocating for an approach that would protect New York’s autonomy. There was also something odd at the hearing, as Maxine Waters seemed unclear whether New York has a stablecoin regulatory system.

According to an anonymous Democratic staffer from the committee, the New York Department of Financial Services participated in the legislative discussions and advocated for a regulatory mechanism at the state level, which the White House subsequently opposed. If you look at the five Democratic members of Congress who supported the bill, two of them are from New York: Ritchie Torres and Gregory Meeks. A spokesperson for the New York Department of Financial Services declined to comment to Fortune Crypto.

As a result, new divisions have emerged around the regulation of cryptocurrencies, which are not partisan disputes but rather involve other issues such as state regulation versus federal regulation. I asked the staffer why most Democrats opposed at least preserving New York’s system. He replied, “It’s a million-dollar question.”

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