U.S. Senator Bill Hagerty's Draft Stablecoin Legislation

U.S. Sen. Bill Hagerty's draft stablecoin legislation could serve as an outline for future bills in 2025, according to investment bank TD Cowen.

Last week, the crypto-friendly Tennessee Republican unveiled a discussion draft to create a regulatory framework for stablecoins. It includes a provision stating that issuers exceeding a $10 billion threshold may receive a waiver from their federal regulator to remain under state jurisdiction. The draft also specifies that reserves must be maintained on a one-to-one basis with reserves of U.S. currency.

> "This draft bill should form the foundation for legislation that we expect Congress to enact next year. This is even more likely if Trump wins, as Hagerty is close to the former president," wrote Jaret Seiberg of TD Cowen Washington Research Group.

Hagerty is considered a potential contender for a role in Republican candidate Donald Trump's cabinet if he wins, either in national security or Treasury secretary roles. He is a member of the Senate Banking Committee, overseeing key agencies like the U.S. Securities and Exchange Commission.

Hagerty stated that his draft stablecoin bill closely aligns with efforts from House Financial Services Chair Patrick McHenry (R-N.C.) and Maxine Waters (D-Calif.), who have been working on their bill over the last two years. While the bill advanced out of the Republican-led committee last year, it has struggled to gain traction. Waters had previously criticized the bill as "deeply problematic" due to a provision permitting state regulators to approve stablecoin issuances without Federal Reserve input.

Bipartisan consensus on regulatory oversight is essential, according to Seiberg.

> "Key will be finding bipartisan agreement on which regulators will oversee stablecoins. If Trump wins, the prospects for this bill are even higher," Seiberg noted.

There may still be momentum for a stablecoin bill before the year ends. Last month, during a congressional hearing, Waters expressed her desire to "strike a grand bargain on stablecoins" before the conclusion of the year.