Democrats on Tuesday decried a Republican-led stablecoin bill as a handout that would empower Elon Musk and “crypto bros” at the expense of retail traders and national security.
The bill, dubbed the Stable Act, “tears down the wall that was used to separate banking from commerce,” said Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, during a hearing.
Removing this barrier will allow big tech firms such as Elon Musk’s X to issue their own money, as Facebook attempted several years ago with its aborted Libra stablecoin, Waters, a California lawmaker, said.
Libra rapidly became a byword for blockchain overreach after lawmakers and regulators condemned the venture as a threat to financial privacy and stability. Facebook, now called Meta, disowned the initiative when Libra was sold to Silvergate Bank, which failed in 2023.
After the industry contributed more than $130 million to pro-crypto candidates in the 2024 election campaign, Democrats appeared to soften their tone on digital assets regulation.
Most notably, dozens of Democrats recently joined their Republican colleagues in repudiating a Biden-era regulation that would have forced websites connecting to DeFi protocols to perform customer background checks.
Nevertheless, Waters’ broadside signalled there are limits to Democrat’s halting embrace of crypto, and that Democrats are prepared to challenge legislation they deem harmful to investors.
On Tuesday, Representative Stephen Lynch, a Democrat from Massachusetts, said the bill would allow “big tech firms like Meta and Apple to effectively become stablecoin issuers and dominate the stablecoin market.”
He also took issue with a provision in the Stable Act that would allow stablecoin issuers to operate primarily under state rather than federal supervision.
That would encourage states to compete to attract stablecoin issuers, creating a regulatory “race to the bottom,” Lynch said.
Even so, Republicans have majorities in both the House and the Senate to pass legislation over Democratic opposition.
Moreover, President Donald Trump has pledged to usher in an era of “regulatory clarity” for an industry he himself has jumped into, most recently in January when he released his own memecoin.
Some crypto influencers say it’s imperative to take a bipartisan approach to prevent the asset class from being yoked to Washington’s partisan warfare.
Anthony Scaramucci, the hedge fund investor and longtime Bitcoin supporter, argued last month that Democrats are ready to work with Republicans on well crafted legislation.
Indeed, Waters said she was disappointed Republican members of her committee were pursuing a bill without input from Democrats.
Last year, she worked closely with Representative Patrick McHenry, the former GOP committee chair, on a bipartisan stablecoin bill.
“You cannot just erase the fact that Mr. McHenry and I put together stablecoin [legislation] with the kind of guardrails that would avoid consumers from being ripped off,” she said at Tuesday’s hearing.
Republican lawmakers countered the bill would strengthen the US dollar’s position as the world’s top reserve currency, and offer consumers a faster and cheaper way to move money and make payments.
“The US today is one of the most expensive countries in the G20 — I think the most expensive, in fact — for just basic money movement functionality,” said Representative Andy Ogles, a Republican from Tennessee.
“God forbid we ever get into a renminbi-backed stablecoin, or ruble-backed stablecoin, or whatever else is going to be out there.”
Republican lawmakers also rounded on central bank digital currencies.
Last week, committee member Tom Emmer, a Republican from Minnesota, filed a bill banning CBDCs, which he has called an “Orwellian surveillance tool.”
Representative Brad Sherman, a Democrat from California, replied that Emmer’s bill would kneecap a public alternative to stablecoins.
“There’s only one advantage of the coins we’re talking about,” he said, “and that is the crypto bros can make money from it.”
Aleks Gilbert is DL News’ New York-based DeFi Correspondent. You can reach him at [email protected].
