House Has Plan to Make US 'Bitcoin Capital of the World', Rep. Donalds

Florida Republican Representative Byron Donalds said the House will move ahead on a regulatory framework for digital currency aimed at making the US the "bitcoin capital of the world"

Crypto Tries to Go Mainstream

In 2020 you could buy one Bitcoin for less than $10,000; on Friday, you’d have had to pay 10 times as much. That record high – above $111,000 – reflected optimism about a boring-by-design corner of the industry known as stablecoins.

The argument goes something like this: Legislation is working its way through Congress that would provide a framework for the issuance of stablecoins – so-called because they’re supposed to maintain a steady price through a peg to a fiat currency like the dollar. The current inhabitant of the White House is a fan of crypto, and especially of digital assets that bear his name and likeness. He wants progress on the bill. That’s good for crypto, and the way you express confidence in crypto is by buying Bitcoin.

Two firms, Tether and Circle, control most of the existing stablecoin market. Proponents of the bill under consideration say it would make it easier for regulators to monitor these assets and safer for companies to accept stablecoins as payment.

But there are hurdles, including a disagreement between smaller banks and crypto firms.

Community banks don’t want competition for deposits, so they agitated against a provision that would allow stablecoin issuers to pay interest to holders. That puts them at odds with companies like Coinbase, the only publicly traded US crypto exchange. Coinbase CEO Brian Amstrong has said that stablecoins “should be able to pay interest just like an ordinary savings account, without the onerous disclosure requirements and tax implications imposed by securities laws.” (Coinbase did not return a request for comment.)

Meta, back when it was still Facebook, tried and failed for years to launch a stablecoin called Diem for cross-border payments. The Senate’s bill would allow tech and other non-financial firms to issue their own tokens, but they would face a higher regulatory hurdle than banks and credit unions because they would be subject to new rules and approvals.

Some Democrats, like Senator Elizabeth Warren, are not pleased that the Trump family’s associated crypto project, World Liberty Financial, has a stablecoin of its own. They are arguing for provisions that would prevent such potential conflicts of interest. World Liberty and the president maintain that no such conflicts exist.

Despite the concerns, some form of stablecoin legislation is expected to pass. That’s likely to unleash a flurry of dealmaking and increased competition. Bank of America’s CEO Brian Moynihan, for example, has said the bank is prepared to launch its own token if it becomes legal to do so.

Right now, most of the volume in stablecoin usage happens in trading into and out of other crypto tokens or for various illicit activities. To really enter the mainstream, stablecoins will also have to become an easy and accessible option for everyday tasks like buying a coffee or doing a money transfer and less associated with terrorist financing.

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