The drumbeat of stablecoin regulation grows louder.

But the questions —what, when and, above all, how everything is done— are still up in the air.

Privately issued coins had the potential, at least according to some proponents, to upend traditional finance.

But the reality has been much starker, revealing the limitations of stablecoins as they now exist, where trading can and has stopped, and a “backing” that is not as etched in as most thought.

Most recently, US Sen. Kirsten Gillibrand, DN.Y., commented at a Blockchain Association event on Wednesday (Nov. 16) that the new regulatory bill could come at the end of the current session of Congress.

“This bill that we are working on now, and hope to introduce in the next few weeks, would be a comprehensive stablecoin bill,” he said at the event in a CoinDesk report. That legislation is being crafted in collaboration with Republicans Sen. Patrick Toomey of Pennsylvania and Sen. Cynthia Lummis of Wyoming.

The details have yet to be fully revealed, but we note that there is little time to get things done before the current session of Congress ends and the new one begins, in January.

And given the current effort in the House, well, it may be the case that things are delayed.

Setting legislative priorities

The House has just “turned the tables” on the Republican Party. We got a glimpse of what could happen this fall when Rep. Patrick McHenry, RN.C., told PYMNTS’s Karen Webster that stablecoins will be under the microscope. Existing legislative proposals are still in the process of being changed.

“What we have now is a complicated policy,” told Webster, “and it’s a complicated piece of legislation, with compromises inside… the nature of legislative compromise doesn’t usually create something beautiful. Create something of practical consequence. And this is what I’m going for.”

At a high level, he said, we need stablecoins. Among others, Tether USDT and Circle’s USDC have advantages over bitcoin and its crypto brethren, which are volatile and anything but stable.

“But we don’t have a federal regulatory ‘formula’ around it,” he told Webster last month, “or an idea of ​​the assets that act as the backing.” McHenry said that if he heads the House Financial Services Committee, stablecoins will be on the agenda, though not first on the list.

There is also some urgency in the private sector.

Circle CEO jeremy allaire wrote a public letter to lawmakers, including Rep. Maxine Waters, D-Calif., who chairs the House Financial Services Committee, and McHenry.

“The industry is transitioning from its dial-up phase, where payment stablecoins and blockchains have helped facilitate the buying and selling of digital assets, to the utility phase, where traditional commerce, from buying a cup of coffee to finance a new company, will converge with traditional financial services”, Allaire wrote.

But there is a vital clue in the mix. Fed Vice Chairman of Supervision michael barr said in a House hearing on Wednesday that dollar-backed stablecoins “really borrow the trust of the Federal Reserve,” adding that it’s “important that Congress steps in and says it’s not allowed to offer a stablecoin unless it’s done under a strong prudential framework.” with the supervision of the Federal Reserve, supervision, regulation and approval. Private money can create huge risks to financial stability unless it is properly regulated.”

That last comment, about private money, sits at the center of what could be the ultimate debate over stablecoins: whether they should be privately issued, and if so, what the parameters are. have to be.

In recent months, we have seen several high-profile examples of stablecoins “breaking the money” and losing the 1:1 pegs they have become so famous for. Amid the FTX blackout, exchanges like Crypto.com have halted USDT and USDC withdrawals and deposits on the Solana network. Halting activity as the dust settles may be prudent, but it may not build confidence in digital stocks.

If the Office of the Comptroller of the Currency continues to be guided by its own letters issued in recent years that banks should be the ones to be licensed to issue stablecoins, then the playing field may narrow somewhat. Congress seems poised to weigh in more on the matter with the start of the new year.

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