Investment bank TD Cowen: Bipartisan stablecoin bill is expected to reach an agreement, but there are currently political obstacles

Odaily News Republican and Democratic leaders in the United States have recently proposed their own approaches to stablecoin regulation. French Hill, chairman of the House Financial Services Committee, released a draft legislation last week that would give the Office of the Comptroller of the Currency the power to "approve and supervise federally qualified non-bank payment stablecoin issuers" rather than providing a federal path for "payment stablecoin issuers" through the Federal Reserve.
On Monday, the committee’s top Democrat, California Rep. Maxine Waters, released a discussion draft that included language regarding federal regulation of stablecoins.
Former CFTC Chairman Timothy Massad testified at a hearing on Tuesday, criticizing the Republican-led stablecoin bill and saying it had some shortcomings, including weaker standards for states and no ongoing federal oversight of states, saying “this is a recipe for chaos.”
Since 2022, Waters has been working with Patrick McHenry, a North Carolina Republican and current chairman of the House Financial Services Committee, to develop a regulatory framework for stablecoins. Last year, the Republican-led committee passed a bill. At the time, Waters called the bill "deeply problematic" because one of the provisions allowed state regulators to approve stablecoin issuance without the Fed's input.
“I believe this legislation provides the best foundation to move forward with a federal framework to be signed into law,” Waters said Tuesday.
Ji Kim, chairman and acting CEO of the Crypto Innovation Council, said in a prepared testimony that stablecoins are rapidly gaining popularity. Kim also called on Congress to introduce “such efforts should establish requirements that stablecoin issuers must comply with, including appropriate registration, reserve requirements, redemption procedures, general prohibitions on rehypothecation, compliance with the BSA (Bank Secrecy Act), and more.”
Investment bank TD Cowen said Hill’s discussion paper was “workable” but said future negotiations would likely be partisan and not concluded until late this year after Congress deals with expiring tax cuts.
TD Cowen's Washington research team, led by Jaret Seiberg, also said Waters' bill would give the Fed power over non-bank issuers. "We think the Waters and Hill bills are close enough that a deal is feasible," Seiberg wrote in a note on Monday. "The hurdle is political, as President Trump is trying to shut down the Consumer Financial Protection Bureau, which makes it difficult for Democrats to reach a deal with Republicans. This is another reason why we don't think action will be taken soon." (The Block)