Congress Moves to Regulate Stablecoins, Temporarily Bans Some Digital Assets

The US House Financial Services Committee Chairman French Hill and Digital Assets Subcommittee Chairman Bryan Steil have introduced a discussion draft for the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act of 2025.

The proposed legislation aims to establish a clear regulatory framework for stablecoins while addressing financial stability concerns.

Legislation Proposes Oversight on Stablecoins

A key provision of the bill imposes a two-year moratorium on the issuance of endogenously collateralized stablecoins, which are digital assets backed solely by another digital asset issued or maintained by the same entity.

Lawmakers argue that such stablecoins pose risks related to liquidity, volatility, and potential market manipulation. To further assess the risks and benefits of these digital assets, the bill requires the US Treasury Department, in collaboration with the Federal Reserve, Securities and Exchange Commission (SEC), and Office of the Comptroller of the Currency (OCC), to conduct a comprehensive study.

It will evaluate the technological design, governance structures, and reserve compositions of stablecoins, as well as their impact on financial markets and consumer protection.

The proposed framework also seeks to define permissible stablecoin issuers, requiring them to be either insured depository institutions or qualified non-bank entities that meet strict capital, liquidity, and transparency standards. Additionally, the bill outlines new oversight mechanisms for stablecoin issuers, including requirements for monthly financial disclosures, independent audits, and risk management protocols.

In an official statement, Digital Assets Subcommittee Chairman Steil said,

“By implementing a clear regulatory structure for payment stablecoins, we can support continued innovation, bolster the U.S. dollar’s position as the world’s reserve currency, and protect consumers and investors. I look forward to getting feedback from consumers, issuers, and stakeholders on this draft legislation as we work to provide clear rules of the road for this innovative technology.”

Once passed, federal agencies will have 180 days to develop implementation rules, followed by an 18-month transition period before full enforcement.

Regulating Stablecoins

The latest bill comes after a bipartisan group of US senators introduced the Guiding and Establishing National Innovation (GENIUS Act) to regulate stablecoins while promoting financial innovation.

The bill, sponsored by Republican Senators Bill Hagerty, Tom Scott, Cynthia Lummis, and Democrat Kirsten Gillibrand, defines stablecoins as digital assets pegged to the US dollar and sets licensing and reserve requirements. Issuers with over $10 billion in assets must follow Federal Reserve regulations, while smaller firms can operate under state oversight.