Stablecoin Bill Unlikely to Get Pinned to FAA Reauthorization, Putting Effort On Hold Again

• A Democratic aide familiar with the negotiation said House and Senate leaders are insisting on a clean FAA reauthorization that wouldn't allow the attachment of a stablecoin bill.

• The effort has drawn key support and may be tried again as the congressional session wanes.

Advocates for long-awaited U.S. stablecoin legislation tried to tie it onto an unrelated must-move reauthorization bill, but leaders in the Senate and House of Representatives are seeking to keep that effort clear of such attachments, according to a Democratic aide.

U.S. lawmakers had been engaged this week in serious conversations about whether to jam a stablecoin regulation amendment onto the Federal Aviation Administration reauthorization legislation, which is approaching a deadline. Such efforts to use that bill for other business were rebuffed by leaders favoring a so-called clean bill, so the leading stablecoin negotiation between House Financial Services Committee Chair Patrick McHenry (R-N.C.) and its top Democrat, Rep. Maxine Waters (D-Calif.), will return to talks on a final deal, said the aide, who requested anonymity because the negotiations aren't public.

Still, the serious maneuvering on behalf of stablecoin oversight reveals how much closer that vital corner of the industry is getting to daylight.

For the first time, the necessary senators engaged in the negotiations. Senate Banking Committee Chairman Sherrod Brown (D-Ohio) has said he's open to pairing stablecoin regulation with his push for a bill opening access to the financial system for cannabis businesses. And Senate Majority Leader Chuck Schumer (D-N.Y.) seemed to be on board for that, though Minority Leader Mitch McConnell (R-Ky. ) continues to signal he opposes marijuana banking.

The energy devoted this time could suggest that stablecoins may come up again when other must-pass bills move through Congress – and it may now be intertwined with the high-profile marijuana legislation.

"We believe this push will reveal how much support both have in Congress and who remains opposed," said Jaret Seiberg, an analyst with TD Cowen, in a research note. "It is why we see this effort offering insight into what could happen with these bills later this year when we expect the real push for enactment."

The vehicle that carries the stablecoin (and possibly marijuana) legislation doesn't have to make sense. As the industry learned previously, an infrastructure bill carried the most important move against crypto to date.

A final compromise version of the stablecoin bill that pleases both parties and both chambers hasn't yet emerged, so industry insiders are hesitant about cheering it on until they can get a good look.

"As with all legislation, the devil is in the details," said Kristin Smith, CEO of the Blockchain Association, in an interview with CoinDesk. "We look forward to seeing and providing feedback on any new drafts of compromises that emerge."

At this stage, multiple lawmakers could have major incentives to make a stablecoin bill happen.

"Brown has an incentive to get SAFER Banking [the marijuana banking bill] over the finish line this year, which would give him a win on a subject popular with voters, cannabis reform, months before a tough re-election fight," according to a Tuesday analysis from Beacon Policy Advisors, a firm that tracks financial policy in Washington. Beacon also noted that this is "a legacy-defining issue for McHenry, who is retiring from Congress at the end of his term."

Read More: U.S. Senators Lummis, Gillibrand Take on Stablecoin Legislation With New Bill