From ledgerinsights

Yesterday, Congressmen Hill and Steil released a discussion version of the STABLE Bill for stablecoins. It is substantially similar to the GENIUS Bill published by the Senate earlier this week and we provide a brief comparison between the two below.

“Building upon our work on digital assets in the last Congress, our discussion draft will provide clarity for payment stablecoins and ensure a federal and state path for stablecoin issuers,” said Congressman Hill, Chairman of the House Financial Services Committee. “Subcommittee Chairman Steil and I look forward to receiving feedback from the public and working in tandem with the Trump Administration and our colleagues in the House and Senate to make sure we get this right and deliver a dollar-backed stablecoin for the American people.”

The House Financial Services Committee previously voted in favor of a stablecoin bill. However, some Democrats including the ranking member, still had concerns about a potential race to the bottom by State regulators. Both the current House and Senate Bills give regulators comparatively narrow scope for rulemaking that may address previous concerns. The biggest area of latitude given to state regulators will be the setting of capital requirements for issuers.

Key differences between the STABLE and GENIUS Bills

So what are the key differences between the two bills? They aren’t that substantial.

The biggest is probably the Senate GENIUS Bill requirement that large stablecoins of $10 billion be federally regulated. However, it allows the issuer to opt to remain state regulated, provided the state framework is substantially similar to the federal one. The House’s STABLE Bill allows large stablecoins to remain state regulated.

There are some differences regarding the reserves allowed. Generally both support bank deposits, central bank reserves, short term Treasuries or repo (also involving short term Treasuries). The Senate Bill additionally allows similar money market funds and reverse repo. Reverse repo is currently widely used by stablecoin issuers. It involves the issuer depositing cash with banks, often overnight or for a few days, and receiving Treasuries as collateral.

The Senate Bill explicitly gives stablecoin holders priority in the case of the bankruptcy of the issuer.

The comparison table below was created quite quickly (by a human), so is likely to be imperfect.

Some peculiarities

As we noted with the GENIUS Bill, in a crisis, the Federal Reserve can intervene with State regulated stablecoins. On the one hand, the House STABLE Bill is more sensible, giving the Fed a wider latitude in its actions, although only for bank subsidiaries. For non bank, state regulated stablecoins, the House Bill gives the same authority to the OCC. However, both Bills require the Fed (or OCC) to give the state regulator five days notice before taking action. Does that make sense?

Consider the speed of the collapse of Silicon Valley Bank. Stablecoins work MUCH faster. After five days, either the crisis will be over or the stablecoin will be worth close to zero.

Finally, in the case of the House Bill, we weren’t entirely clear when the Act would come into force for State regulated stablecoins. We may well have missed something here, but given all the major stablecoins are currently state regulated, that matters.