Why It Matters

The House Financial Services Committee held a hearing September 2 titled "Strengthening The American Economy: Promoting Growth, Opportunity, And Prosperity," examining economic growth, affordability, housing, access to capital and financial innovation.

The hearing highlighted competing assessments of the economy and recent financial policy changes. Committee Republicans pointed to legislation on stablecoins, digital assets, capital markets and housing, while Democrats focused on affordability, consumer protection and economic inequality.

The Big Picture

The dollar's share of global foreign-exchange reserves has declined from more than 70 percent in the late 1990s to approximately 57 percent as of the first quarter, according to testimony from Circle President Heath Tarbert. Tarbert argued that the decline underscores the importance of maintaining the dollar's role as financial infrastructure increasingly moves online.

Congress has already moved on several fronts. The GENIUS Act, enacted in July 2025, established a federal regulatory framework for payment stablecoins. The law required federal regulators to issue implementing regulations by July 18, but regulators missed that statutory deadline, with several rulemakings still underway. The law is expected to take effect January 18, 2027, unless final implementing regulations trigger an earlier effective date.

The 21st Century ROAD to Housing Act, enacted in July, prohibits the Federal Reserve from issuing or creating a central bank digital currency or substantially similar digital asset through December 31, 2030. The law also includes a rule of construction specifying that the provision does not authorize the Federal Reserve to issue a CBDC directly or indirectly without congressional authorization.

The House also passed the Main Street Capital Access Act, the CLARITY Act, described as a digital asset market structure framework, and the INVEST Act during the 119th Congress. The INVEST Act passed the House 302-123, with 87 Democrats joining Republicans in supporting the measure.

What They're Saying

The September 2 hearing featured five witnesses offering different perspectives on economic policy and financial regulation: Tarbert; Kathleen Kraninger, president and CEO of the Florida Bankers Association; Lynn Martin, president of the New York Stock Exchange; Alex Pollock, senior fellow at the Mises Institute; and Darrick Hamilton, university professor of economics and founding director of the Institute on Race, Power and Political Economy at The New School.

Tarbert argued that compliant stablecoins like USDC are critical to preserving U.S. dollar dominance. He pointed to dollar-backed stablecoins and tokenized assets as areas where regulation could influence future financial infrastructure and urged Congress to advance the CLARITY Act. Tarbert argued that stablecoins could reinforce the dollar's international role as financial activity increasingly moves onto digital networks.

Circle received final approval from the Office of the Comptroller of the Currency on July 10 to establish First National Digital Currency Bank, N.A., which will operate as Circle National Trust. The national trust bank will initially provide fiduciary digital asset custody services for Circle and its affiliates, with management of the USDC reserve planned as a future capability.

Lynn Martin, president of NYSE Group, testified on capital markets and the role of public markets in economic growth. Hamilton focused on economic opportunity and inequality, while Kraninger addressed banking, access to credit and the regulatory environment. Pollock offered his perspective on financial regulation, monetary policy and economic growth.

Committee Chair J. French Hill (R-AR) highlighted the committee's legislative record, including enactment of the GENIUS Act and 21st Century ROAD to Housing Act and House passage of the Main Street Capital Access Act, INVEST Act and CLARITY Act. Hill argued that regulatory certainty and recent financial legislation would support investment, innovation and economic growth.

Ranking Member Maxine Waters (D-CA) offered a sharply different assessment of economic conditions, focusing on affordability and consumer protections. Waters said mortgage rates had climbed back to 6.7 percent and argued that high housing costs were making homeownership increasingly difficult.

Political Stakes

Tarbert's testimony presented stablecoins as one potential mechanism for extending the dollar's international role without relying on a Federal Reserve-issued digital currency. He urged Congress to implement the GENIUS Act and advance the CLARITY Act as financial activity increasingly moves onto digital platforms.

Hamilton's testimony presented a different perspective on economic growth, focusing on inequality and how economic policy affects workers and households.

The hearing also highlighted areas where financial legislation has attracted bipartisan support. The INVEST Act passed the House 302-123, with 87 Democrats voting for the measure, while the 21st Century ROAD to Housing Act passed the House 358-32 before becoming law.

The Other Side

While Tarbert emphasized the need for regulatory clarity to support stablecoin adoption, banking groups have pushed for tighter restrictions on stablecoin rewards. The debate reflects broader competition between traditional banks and digital asset companies over how stablecoins should operate within the financial system.

Committee Democrats also challenged Republicans' broader characterization of economic conditions. Waters argued that affordability pressures remain significant, pointing to mortgage rates, housing costs and consumer protections as evidence that economic growth has not translated evenly to households.

The Bottom Line

Implementation of the GENIUS Act remains underway. The statute required federal regulators to promulgate implementing regulations by July 18, but agencies had not completed all final rules by that deadline. The Treasury Department issued another proposed rule in August covering the issuance, offering and sale of payment stablecoins.

The law is expected to take effect January 18, 2027, unless final implementing regulations make it effective earlier. Meanwhile, the CLARITY Act remains part of the congressional debate over a broader regulatory framework for digital asset markets.

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