US Lawmakers Release Draft Proposal for Stablecoin Regulation to Fortify Dollar Dominance

Highlights:

• US lawmakers propose stablecoin regulations to strengthen the dollar and drive innovation.
• The STABLE Act of 2025 includes a two-year ban on self-issued asset-backed stablecoins.
• Trump administration prioritizes stablecoins, Bitcoin adoption, and blockchain development in financial policies.

On Feb 6, Bryan Steil, chairman of the House’s Subcommittee on Digital Assets, and French Hill, chair of the House Financial Services Committee, released a draft discussing stablecoin regulation in the United States. The 47-page document outlines a regulatory framework for dollar-backed stablecoin payments to strengthen the USD’s global reserve status.

🚨NEW: Chairman @RepFrenchHill and @RepBryanSteil today released their discussion draft for #stablecoins.

Read more🔗https://t.co/wIzov4s99t

— Financial Services GOP (@FinancialCmte) February 6, 2025

The Stable Act of 2025 proposes a two-year ban on stablecoins backed solely by self-issued digital assets. It also requires the Secretary of the Treasury to submit a report within 365 days “that contains all findings made in carrying out the study.” This includes the benefits and risks of technological design features, utilization of non-payment stablecoins, and nature of reserve compositions, among other things. 

In a press release, Hill stated that the STABLE Act builds upon the efforts of former House Financial Services Committee Chair Patrick McHenry. He emphasized that the draft would “clarify rules for payment stablecoins and create a clear federal and state route for stablecoin issuers.”

Hill announced they would collaborate with the Trump administration, the House, and the Senate to ensure a proper framework and introduce a dollar-backed stablecoin for Americans. Chairman Steil said establishing clear stablecoin regulations would drive innovation and strengthen the U.S. dollar’s global reserve status. Steil looks forward to feedback from consumers, issuers, and stakeholders on the draft legislation.

Senators Advocate Stablecoin Regulations

Senate Banking Committee Chair Tim Scott underscored the importance of a stablecoin regulatory framework for driving industry growth and innovation in the United States. He reaffirmed his commitment to working with Chairman Hill and the House to advance the proposal to President Trump’s desk. Senator Cynthia Lummis also supported, stating, “I look forward to working with my friends in the House to pass bipartisan stablecoin legislation that protects our dual banking system.”

Strong Stablecoin Rules Can Boost Dollar’s Global Role: Fed Governor Waller

Federal Reserve Governor Christopher Waller remains optimistic about stablecoins enhancing the dollar’s role as a reserve currency. According to Bloomberg, he emphasized that stablecoins contribute positively to the payment system.

He said regulatory safeguards are needed to ensure stablecoins are properly managed. This includes verifying the availability of funds, overseeing authorization, and ensuring full backing. Waller urged both major political parties to pursue crypto legislation. He believes well-structured stablecoin regulations will further strengthen the dollar’s dominance in global trade and finance.

Trump’s Crypto Czar Says US Aims to Bring Stablecoins Onshore

The draft bill’s release follows confirmation from the Trump administration that it plans to regulate stablecoins and bring them under U.S. jurisdiction. David Sacks, Trump’s Crypto Czar, said stablecoins are a key focus for the administration, along with Bitcoin adoption and blockchain development, during CNBC’s Closing Bell Over Time on Feb. 4.

The US is moving to regulate stablecoins, aiming to bring the market onshore, according to crypto czar David Sacks. This marks a significant shift for dollar-backed digital assets. 🏦💰 #Crypto #Stablecoins #Mercex #MercexNews

— Mercex (@mercex_io) February 5, 2025

Sacks noted that the stablecoin market has grown significantly but remains mostly offshore, adding that the U.S. aims to bring this innovation onshore. Crypto Czar believes stablecoins could generate trillions in new demand for U.S. Treasurys. This, he suggests, could help manage national debt and lower long-term interest rates.

The industry is valued at $232 billion, with 97% dominated by U.S.-pegged stablecoins like Tether’s USDT, which alone holds over 60% of the total market capitalization, according to CoinGecko.