Markup of Various Measures

Committee on Banking and Currency

2025-04-02

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Source: Congress.gov

Summary

This meeting of the committee addressed several pieces of legislation concerning financial innovation, digital assets, access to credit, and the regulatory landscape for these new technologies. The discussion covered the nuances of stablecoin regulation, efforts to combat illicit finance, proposed changes to small business lending data collection, and the controversial topic of central bank digital currencies.

Themes

Stablecoin Regulation (STABLE Act)

Proponents of the STABLE Act emphasized the need for a clear federal framework for stablecoins to foster innovation, maintain U.S. global competitiveness, and reinforce dollar dominance in digital payments [ 00:35:37 ]

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. They highlighted the bill's balance of state and federal oversight, creating a "race to the top" for regulatory frameworks, and its inclusion of robust consumer protections through strict reserve requirements, transparency, and anti-money laundering (AML) measures . Republican members frequently referenced President Trump's support for this legislation as a directive for congressional action .

Opponents, primarily Democratic members, raised significant concerns about potential conflicts of interest due to President Trump and his family's involvement in stablecoin ventures, such as World Liberty Financial and USD1 . They argued the bill lacked sufficient consumer protections, resolution regimes for failing stablecoins, clear enforceable reserve requirements, and explicit prohibitions against taxpayer bailouts [ 00:53:40 ]

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. Additional concerns included the separation of banking and commerce, allowing large tech companies to issue stablecoins, inadequate national security measures, and insufficient criminal penalties for violations [ 00:52:49 ]

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. The discussion also touched upon issues with uninsured deposits, foreign-held reserves, and the debate over permitting self-hosted wallets and cryptocurrency mixers [ 05:48:12 ]

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.

Combating Illicit Finance (Financial Technology Protection Act)

This bill aims to combat terrorism and illicit financing by establishing a working group composed of federal agencies, intelligence experts, and private sector leaders [ 00:37:11 ]

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. Proponents highlighted that the transparent and traceable nature of blockchain technology enhances law enforcement's ability to recover illicit funds and prevent their use by adversaries . The bill was presented as a common-sense, bipartisan effort crucial for national security .

Small Business Lending Data (1071 Repeal to Protect Small Business Lending Act)

Republicans advocated for repealing the CFPB's Section 1071 rule, which mandates the collection of sensitive personal data from small business loan applicants [ 00:38:32 ]

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. They argued the rule is burdensome for lenders, increases costs, and could reduce access to credit, particularly for minority-owned businesses, if community banks exit small business lending . Concerns were also raised about privacy and the potential public release of sensitive data, advocating for merit-based lending over race-conscious decision-making .

Democrats strongly opposed the repeal, asserting that Section 1071 is vital for transparency and fairness in small business lending to combat discrimination and address capital access disparities for women and minority-owned businesses . They cited the Paycheck Protection Program as evidence of existing disparities and argued that the rule is not overly burdensome, with many smaller institutions exempted .

CBDC Anti-Surveillance State Act

Proponents of this bill sought to prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) without explicit congressional authorization [ 00:37:55 ]

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. They voiced concerns that a CBDC could become a tool for financial surveillance, allowing the government to track transactions and restrict activities, citing examples from China and Canada . The bill was framed as a defense of privacy, individual sovereignty, and free market principles, aligning with President Trump's stance against a federal CBDC .

Opponents argued the bill was overly broad, hindering research into wholesale CBDCs that could benefit financial institutions and potentially cause the U.S. to lag behind other nations in digital currency innovation . They suggested the bill's true purpose was to eliminate competition for private cryptocurrencies and stablecoin issuers [ 11:31:24 ]

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. Concerns were also raised about the hypocrisy of privacy arguments while large tech firms collect vast amounts of user data, which the government can access .

Promoting New Bank Formation Act

This legislation aims to promote the formation of new (de novo) banks by offering a three-year phase-in period for federal capital requirements and lowering the Community Bank Leverage Ratio for rural community banks . Supporters argued that community banks are vital for local economies and that reducing regulatory burdens would reverse the decline in new bank charters, fostering diversity and competition in the banking sector .

Opponents expressed concern that lowering capital requirements could undermine the safety and soundness of new banks and that the decline in new banks is more related to broader economic factors than solely regulation . Some also pointed to potential increased competition from stablecoin issuers and FinTech platforms as a threat to traditional community banks .

Tone of the Meeting

The meeting was characterized by a divisive and contentious tone, with frequent and strong disagreements primarily along party lines on almost all discussed bills and amendments . Many speakers expressed deep concern and urgency regarding consumer protection, financial stability, and national security, often linking these issues to the rapid pace of technological change and perceived political corruption [ 00:38:45 ]

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. There was a clear ideological divide, with opposing philosophies on government regulation, market intervention, and individual liberties shaping the debate, particularly concerning CBDCs and consumer protections [ 00:37:45 ]

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. The discussion was frequently marked by political and personal accusations, especially from Democratic members targeting President Trump and his administration's perceived conflicts of interest and broader influence in the crypto space, escalating to accusations of "coup d'etat" attempts and undermining democratic institutions .

Participants

Transcript

Without objection, the committee will come to order.  Without objection, the chair is authorized to declare a recess of the committee at any time.  Without objection, all members shall have five legislative days within which to submit additional materials to the chair for inclusion in the record.  A quorum, being present, will now proceed to today's business.  Since we don't have votes today, we're going to just as expeditiously as possible   work to complete our debate.  And if we need to, we can recess briefly along the way, and we'll reconvene for recorded votes.  But we'll proceed until we finish today's work.  Let me recognize myself for an opening statement.   Good morning.  Since we kicked off the 119th Congress, our members have been hard at work crafting legislative solutions to difficult problems.  Today, we will consider several bills to promote financial innovation and expand access to financial services.   Three of these bills are part of our ongoing effort to promote financial innovation through sound digital asset policy, while the other two seek to enhance access to credit by removing compliance burdens and fostering greater competition through new bank formations.  Payment stablecoins present a new and flexible payment innovation.  This largely frictionless finance will simplify the ability to move money around the world in an instant.   But as with all new technologies, new and difficult risks can emerge.  In this committee, we have openly discussed the potential risks surrounding digital assets.  Members in this room on both sides of the aisle have now spent years collaborating on stablecoin legislation, including leadership under ranking member Waters, both as ranking member and as chair.
We've all come to the important conclusion, innovation needs guardrails, not roadblocks.  The STABLE Act, championed by Subcommittee Chair Brian Stile, is just that.  To date, state regulation has allowed stablecoin ecosystem to develop in the United States, but for payment stablecoins to reach their full potential, a clear federal framework must be an option.   Moreover, several foreign jurisdictions have established or are developing regulatory frameworks for payment stablecoins, making the enactment of a U.S.  framework essential for our global competitiveness.  Blockchain technology continues to transform the way money moves.  The fact is policymakers, regulators, and law enforcement must keep up with these changes.   Representatives Nunn and Heim's leadership on the Financial Technology Protection Act will ensure that government is informed, equipped, and coordinated on emerging financial technologies.  The working group established under the bill will bring law enforcement and firms in the digital asset ecosystem together to come up with ideas to improve anti-money laundering, counter-terrorism, and countering other illicit financing efforts.   Committee Republicans have been clear.  Digital asset policies must promote private sector innovation and foster competition to ensure the United States remains the world's leader in global payments.  The Federal Reserve cannot issue a digital currency without congressional authority.   Majority Whip Emmer's Anti-CBDC Surveillance Act represents years of work and ensures that Americans' financial privacy by prohibiting the Federal Reserve from issuing a CBDC without explicit congressional authorization.  In this committee, we are committed to increasing access to financial services for small businesses, consumers, and households.   Small Business Committee Chair Roger Williams' 1071 Repeal to Protect Small Business Lending Act is crucial to ensure that small businesses have access to competitive, cost-effective credit from their local financial institutions.
Importantly, Financial Institution Subcommittee Chair Andy Barr's Promoting New Bank Formation Act creates a phase-in period for de novo financial institutions to meet capital standards, helping to promote in a prudential manner new entrants to serve growing communities.   The reality is that small financial institutions have struggled mightily under an increasingly heavy regulatory burden since the 1990s.  Allowing new bank entrepreneurs time and flexibility to open their doors will boost competition and expand access to credit for the financially vulnerable Americans and our communities.  I look forward to the discussion today.  I thank members on both sides of the aisle for their work on these important pieces of legislation, and I yield back.   I now recognize the ranking member for an opening statement.
Thank you very much, Mr. Chairman.  When I was chair of this committee, I launched the congressional effort to create a federal framework around stable coins.  I wanted robust protections, especially in the wake of major crypto scams that robbed investors of their life savings.  After years of hard work,   former McHenry and I, came to a bipartisan agreement, while not perfect, was a great step in that direction.  And Mr. Chairman, I think you worked also with Mr. McHenry to come to where we had decided we could agree on a number of things.  But things have changed.  Since last Congress, President Trump has come into office   and leveraged the power of the presidency to establish multiple crypto schemes to enrich himself and his family from a fraudulent meme coin, which collectively lost his investors $2 billion, while him and his family pocketed   $350 million to a crypto reserve that boosts the price of crypto held by him and his cabinet to most recently launching in the middle of our negotiation, his own stable coin through World Liberty Financial.  It's a display of greed.

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