Pass the Stablecoin Bill Now

On July 27, H.R. 4766, the Clarity for Payments Stablecoins Act of 2023, passed out of committee with a bipartisan vote and now heads to the floor of the House for consideration. This means the United States, after years of inaction, now faces a historic opportunity to expand the reach of the dollar and financial access, both here and globally.

Stablecoins, which are the representation of a unit of fiat currency on a blockchain, have lacked any federal regulatory clarity in the United States to date despite having been created almost a decade ago, in 2014. This definition also reveals something very important about fiat-backed stablecoins in particular: they are old and understood financial products (stable value products) using new technology (blockchain).

Austin Campbell is the founder and managing partner of Zero Knowledge Consulting, and an adjunct Professor at Columbia Business School.

After the financial crisis, there was a significant period of reform in financial markets, where we gave preference to price stability products that worked properly, such as government money market funds or stable value funds, and penalized, restricted, or increased capital for those which did not work properly, such as deposits at highly leveraged banks, prime-money market funds, or securitizations. This means we know how to define safe, stable reserves for a stablecoin that are not a threat to financial markets, and H.R. 4766 does this.

At the same time, despite the lack of clarity and regulatory animus towards stablecoins in the United States, the space has grown internationally from zero to well over $100 billion in less than a decade. Every dollar that flows into stablecoins is funding for the U.S. Treasury at a time when we desperately need it. Every dollar that flows into stablecoins is a dollar that can leave an exploitative local financial system, or a high priced intermediary, and flow into a simple, transparent, cheap option if structured like the payments stablecoins in H.R. 4766.

Non-U.S. jurisdictions have realized the power of this innovation and are racing to take advantage of it. Singapore’s MAS has granted a payments license to Circle. Stablecoin projects are launching in Bermuda, in the UAE, and First Digital has already launched a USD stablecoin in Hong Kong. Tether, perhaps the…