During today’s markup hearing on the STABLE Act, instead of focusing on the substance of the stablecoin bill, most Democrats highlighted the conflicts of interest created by the Trump family controlled stablecoin. Last week World Liberty Financial, an entity 60% owned by the Trump family, announced plans to issue a stablecoin, USD1.
Update: Ultimately several Democrats supported the bill which was passed by the Committee with a 32-17 vote.
Earlier this week, House Financial Services Committee Chair French Hill mentioned that the recent announcement of the Trump family’s stablecoin had complicated legislative efforts. Committee Ranking Member Waters said this was the understatement of the year.
“If there is no effort to block the President of the United States from owning a stablecoin business, just as he owns crypto, which is his largest asset now, I will never be able to agree on supporting this bill and I would ask other members not be enablers, allowing the President of the United States to get away with this,” she said.
Today’s markup hearing was a stark contrast to the recent one in the Senate, which was relatively brief and only discussed substantive issues. Much of the early debate today was around the Trump stablecoin, with amendments beyond conflicts of interest only starting to be discussed about 2.5 hours in.
It became clear during the debate that many Democrat committee members substantially support the bill but have serious issues with the Trump family stablecoin.
Amendments to block Trump stablecoin
Ranking Member Waters and Congressman Liccardo proposed several amendments that would prevent members of the administration or their families
- from getting advance notice of rulemaking
- or prohibit federal officials from sponsoring a stablecoin to prevent foreign influence
- or block the government from using a stablecoin affiliated with the administration.
One issue raised by a few Democrats and Congressman Foster particularly was the lack of clarity about whether stablecoins would be the subject of bailouts. Mr Foster wanted to know whether State regulated stablecoins would be bailed out by the State. Mr Sherman later proposed an amendment to block bailouts.
Representative Lynch highlighted that bailouts could lead to self dealing by the President. If a bailout was ever needed, he could authorize the taxpayer to fund a bailout of his family owned stablecoin.
The bill’s sponsor, Congressman Steil, responded that the amendments were not necessary because the legislation treats issuers of all stripes the same. Mr Lynch said that may be true, but not for the President who is in a position of trust and has the capacity to support a bailout.
Supportive Democrats
Several Democrats were otherwise supportive of the bill. One of the Trump amendments was from Congressman Liccardo, a co-sponsor of the bill.
Congressman Meeks, a New York Democrat, supports the Act’s state pathway option for stablecoins given New York currently dominates issuance, although he wants to see some details tightened. However, he said the World Liberty stablecoin was undermining bipartisan negotiations. He noted the need for certainty in legislation.
“Though the President’s actions have caused me to pause, (because of) the certainty issue, and to make sure that we have clear rules of the game, I’m going to support the Stable Act,” said Representative Meeks.
Democrat Congressman Scott was very respectful of the President, but still expressed his concern about conflicts of interest, saying, “there’s no need for this man to have this stench on his family and himself.”
“I want our President to be clear and good and decent, for he is a good man. And we want to make sure that that rings true,” he said.
Congressman Carstens claimed World Liberty Financial’s connection to Justin Sun, with his alleged Chinese Communist Party ties, may violate the Constitution’s emoluments clause. “My God, it should not be partisan to defend the constitution,” he exclaimed.
Separation of commerce from stablecoins like banking
The Republicans have deliberately not included a clause restricting businesses from issuing stablecoins because stablecoin issuers are not involved in lending, unlike banking where there is a strict separation. The Democrats proposed an amendment to reintroduce the separation of stablecoins and commerce. They highlighted that otherwise Meta (or X) can issue a stablecoin.
Congressman Lynch proposed an amendment to restrict stablecoin issuer activities because he is concerned that otherwise they expose taxpayers to bailouts. Another amendment by Representative Sherman aimed to block bailouts altogether. Most of the Democrat amendments were rejected.
Update: this article was written around 4.5 hours into the hearing, with the vote added later. The hearing of the five bills took around 11.5 hours.
