Maxine Waters’ Wild Ride: Stablecoin Regulation or Just Another Day in Congress?

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On the tenth day of February, in the year of our Lord two thousand and twenty-three, Maxine Waters, the illustrious representative of California’s 43rd Congressional District (a place where the sun shines, and the Wi-Fi is strong), decided it was high time to introduce a draft that was as unnamed as a cat in a room full of rocking chairs.

Now, this bill, which we shall refer to as “The Great Stablecoin Regulation Adventure” (because why not?), aims to create a regulatory framework for stablecoin issuers in the good ol’ US of A. It’s like building a fence around a herd of particularly mischievous goats, but with more paperwork and fewer goats.

Maxine Waters Takes the Stablecoin Bull by the Horns

The proposed bill lays out a licensing and regulatory framework for payment stablecoin issuers, detailing the criteria for both nonbank and bank issuers. Think of it as a recipe for a very complicated cake that nobody really wants to eat, but everyone feels they should bake.

One of the central features is the Federal Reserve’s role in supervising stablecoin issuers, ensuring they comply with the proposed regulations. Because nothing says “fun” like a government agency peering over your shoulder while you try to make a digital coin.

Now, here’s the kicker: the bill insists that stablecoin issuers back their coins one-to-one with reserves. This means they need to have actual money, like US currency, insured deposits, or short-term Treasury bills. It’s like saying, “You can’t just pretend to have a pet unicorn; you need to have a real one, or at least a very convincing cardboard cutout.”

And if you think you can just waltz in and issue a payment stablecoin without permission, think again! Unauthorized individuals or entities will face penalties that could make even the most hardened criminal reconsider their life choices.

“Be fined not more than $1,000,000 for each such violation; (ii) imprisoned for not more than 5 years; or (iii) be fined as described in clause (i) and imprisoned as described in clause (ii),” the bill read, sounding suspiciously like a bad episode of a legal drama.

But wait, there’s more! The bill also includes provisions to strengthen consumer protection, which is a fancy way of saying, “We’re going to make sure you don’t get scammed by someone who thinks they’re a crypto wizard.” It prevents non-financial companies from owning stablecoin issuers, ensuring that banking and commerce remain as separate as oil and water—or cats and dogs, depending on your perspective.

Moreover, it mandates strict compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) laws. So, if you were thinking of using your stablecoin to fund a secret lair, you might want to reconsider.

And just in case you were wondering, individuals convicted of certain crimes (yes, we’re looking at you, Sam Bankman-Fried) will be banned from holding executive positions or significant shares in stablecoin issuers. Because nothing says “trustworthy” like a criminal record.

The Federal Reserve will be granted enforcement authority, while existing regulators, including the Treasury Department, the Consumer Financial Protection Bureau (CFPB), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC), will keep a watchful eye on all things stablecoin-related. It’s like a regulatory family reunion, but with fewer awkward conversations.

This bill is crafted with input from both Republican and Democratic congressional staff, making it a bipartisan effort to create a balanced, effective framework for stablecoin regulation. It’s like trying to make a salad with both ranch and vinaigrette—good luck with that!

“This draft bill fosters innovation, while properly addressing and prioritizing concerns I have long held about safeguarding our nation’s consumers from scams that have plagued the crypto industry,” said Congresswoman Waters, probably while trying to keep a straight face.

Waters’ announcement came hot on the heels of Republicans French Hill and Bryan Steil, who introduced their version of a payment stablecoin bill just days earlier, titled the STABLE Act of 2025. Because if there’s one thing Congress loves, it’s a good acronym.

Meanwhile, in the Senate, efforts to regulate stablecoins are also underway. On February 4, Senator Bill Hagerty introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. Yes, you read that right—GENIUS. Because who doesn’t want to be associated with a bill that sounds like it was named by a particularly enthusiastic marketing team?

And if that wasn’t enough, on February 7, CFTC Acting Chair Caroline Pham announced a CEO Forum focused on stablecoin regulations. This forum will gather major crypto companies to discuss and propose new policies for stablecoins and tokenized non-cash collateral. It’s like a gathering of the crypto Avengers, but with less spandex and more spreadsheets.

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2025-02-11 15:45