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Rep. Maxine Waters (D-Calif.) has proposed a deal to Rep. Patrick McHenry (R-N.C.), the Republican chair of the committee that could potentially advance long-stalled stablecoin legislation in the U.S. before the end of 2024.

What Happened: Axios reported on Monday, citing a Hill staffer, that the proposed package might also address other issues such as deposit insurance reform and legislation allowing legal cannabis companies to access the banking system.

However, it is still unclear whether McHenry or House Speaker Mike Johnson (R-La.) will approve the proposal. If an agreement is reached, the National Defense Authorization Act could be used as a vehicle to push the legislation forward.

Axios further reported that McHenry, a significant ally of the crypto sector, has chosen not to seek re-election, making his time in office limited. Democrats prefer to finalize this deal now to avoid restarting negotiations with a new Republican atop the financial services committee.

Why It Matters: Stablecoin legislation, despite being seen as imminent for years, has yet to reach a floor vote. The legislation primarily favors stablecoins backed by deposits of dollars and other highly liquid instruments, discouraging algorithmic ones. The current proposal has a lot of other details and focus areas which has changed from prior versions.

Stablecoins, cryptocurrencies pegged to the U.S. dollar, have a market cap of $172 billion and trillions in global volume. Companies like PayPal PYPL and Visa V are increasingly entering the stablecoin business, making the legislation even more critical.

Stablecoin legislation would open doors for updating U.S. laws to deal with a part of the cryptocurrency sector. However, any legislative action is highly dependent on the November 2024 elections and its results.

House Financial Services committee key figure Waters has been a long-standing proponent of stablecoin legislation and has recently called the advance of cryptocurrencies “inevitable.”

What's Next: These discussions, along with the future of stablecoin regulation, will be central topics at the upcoming Benzinga Future of Digital Assets event on Nov. 19.

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