On April 1, the Conference of State Bank Supervisors (CSBS) submitted a letter to the House Financial Services Committee expressing concerns with an introduced draft of H.R. 2392—the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act of 2025 (the "Act")—which purports to establish a comprehensive regulatory framework for payment stablecoins in the U.S. In the letter, CSBS expresses support for the development of a national framework for payment stablecoin issuers (PSIs), while warning that the current draft would unnecessarily preempt state regulatory authority and introduce risks to consumer protection and financial stability.
CSBS contended that, as currently drafted, the Act would centralize excessive authority over the stablecoin industry in a single federal agency, likely the OCC, undermining the dual banking system. The letter also emphasized that states already regulate over $50 billion in stablecoin activity and called on Congress to retain the benefits of a cooperative federal-state oversight model.
The letter identified 5 key changes needed to preserve the United States' longstanding cooperative federalism model for the banking system and mitigate related risk factors, including:
- Limiting PSI activities to stablecoin issuance. The proposed draft of the Act allows PSIs to engage in non-stablecoin-related financial activities. The CSBS argues that this, in combination with the Act's capital and liquidity restrictions, increases operational and liquidity risks that could destabilize the market.
- Removing unnecessary preemption of state authority. As drafted, the Act would expand federal preemption to (i) the parent of a federal PSI, (ii) state authority over PSI subsidiaries of national banks, (iii) PSI subsidiaries of state-chartered banks, and (iv) other non-stablecoin activities approved by federal regulators.
- Establishing true parity for state issuers. The Act aims to establish a national framework for stablecoin issuers, but as drafted, it stacks the deck in favor of federal PSIs, by allowing host states to impose additional, undefined obligations on state-level PSIs operating outside their home state.
- Adopting more robust capital and liquidity standards. While the Act tells regulators to set standards for capital, liquidity, and risk management, it limits capital to just what's needed to keep the business running and prohibits stronger, risk-based capital requirements. The CSBS argues this isn't enough to prevent redemption runs and other financial risks.
- Protecting customer funds in bankruptcy. The Act does not clarify how stablecoin holders would recover their funds if an issuer fails. The letter proposes requiring reserves to be held in trust outside the stablecoin issuer's estate to help safeguard consumers in case of PSI bankruptcies.
Putting It Into Practice: The CSBS's opposition to certain provisions of the Act comes at a time when federal regulators are recalibrating their approach to digital assets (previously discussed here, here, and here). The letter underscores the friction between recent efforts to streamline federal oversight of digital assets and the longstanding state-led model for regulating money services firms. As Congress debates a national framework for stablecoins, financial institutions should closely monitor these events as they unfold.
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