US House stablecoin hearing focuses on competing bills for regulation

cointelegraph.com:

State versus federal regulation was a key issue in the hearing on stablecoins in the United States House of Representatives on May 18. The House Committee on Financial Services’ new Subcommittee on Digital Assets, Financial Technology and Inclusion heard testimony from five experts as it considered two proposed bills to regulate stablecoins.

There were two draft bills under consideration by the subcommittee. The Republican bill was published in April ahead of a hearing on stablecoins in the Financial Services Committee. Ranking member Maxine Waters later introduced a competing draft based on a bill that was introduced but not passed in the last session of Congress.

#WATCH: Chairman @RepFrenchHill at today's stablecoin hearing:"Without action from Congress ... stablecoin issuers will not feel confident to build their projects in the U.S."Read more  https://t.co/9yWNDbG46G  Watch his full remarks  pic.twitter.com/v3cMMxTTXr

The “race to the bottom” was the biggest point of disagreement on state-level stablecoin regulation. The Republican bill would allow stablecoin operators to choose the state they register in, without going through the Federal Reserve Board.

Supporters of the bill argue the floor would prevent the race to the bottom and mirror the U.S. two-tiered federal/state banking regulatory system. Democrats were unconvinced. The Democratic bill preserves access to regulation in federal hands with the appropriate regulator. David Portilla, partner at Davis Polk & Wardwell, favored a middle road. He said:

In any case, current regulations were not suited for stablecoins, he said. Besides a “floor” mechanism for federal involvement in stablecoin regulation for setting minimum standards, there could be a “toggle” based on