Stablecoin bill faces delays amid regulatory challenges

Former U.S. Senator Pat Toomey has identified key challenges delaying comprehensive stablecoin regulation, including unresolved issues surrounding issuer reserves, bankruptcy protocols, deposit insurance, and jurisdictional authority.

"I think the Fed is fundamentally not friendly to this technology, so I believe there was never an imminent opportunity to get a bill done," noted Senator Pat Toomey, highlighting the Federal Reserve's cautious stance toward stablecoins as a significant obstacle. 

Despite these challenges, he expressed optimism about bipartisan support for stablecoin regulation, predicting progress starting in 2025 after more immediate priorities, such as administration appointments and budget matters, are addressed.

The next congressional term will likely address crucial crypto legislation, including Senator Bill Hagerty’s Clarity for Payment Stablecoins Act.

This bill proposes state-level oversight for stablecoin issuers with market capitalisations under $10 million, sidestepping federal regulation.

Industry leaders continue to advocate for regulatory clarity, warning of risks without a robust framework.

At the Permissionless III event, Chris Dixon of a16z cautioned that the absence of stablecoin regulation could result in an FTX-style collapse, with broader economic implications.

Stablecoin issuers increasingly influence the U.S. economy by using Treasury bills and government securities to overcollateralise their digital currencies.

The U.S. Treasury’s Borrowing Advisory Committee acknowledged the role of stablecoin issuers in driving Treasury bill demand, suggesting a private blockchain to manage this growth.

With the stablecoin market surpassing $174 billion in market capitalisation, lawmakers and advocates emphasise the need for comprehensive policies to ensure stability and mitigate systemic risks.

Legislative action in 2025 could provide the clarity needed to balance innovation with regulatory oversight.