A new bill has been unveiled by the United States House Financial Services Committee which seeks to impose a two-year ban on certain stablecoins. The bill also aims to provide U.S. agencies, including the Department of Treasury and Federal Banking regulators, with a more hands-on approach to overseeing such crypto assets. The bill was made public for the first time on April 15, 2023, on the House committee’s hearing page, according to a recent report. However, it has been circulating among lawmakers of both parties since as early as the fall of 2022. It is believed to be the first comprehensive proposed law for payment stablecoins to make an appearance in Congress.
The bill specifically targets what it describes as “endogenously collateralized” stablecoins, which are stablecoins that are backed by other crypto assets rather than fiat currency. If passed, the new law would see a two-year ban placed on such stablecoins, in addition to legal trouble for the firms that issue them. The House Financial Services Committee will reportedly meet later this week to discuss payment stablecoins and legislation surrounding this space. If passed, the bill would enable the U.S. Treasury Department to carry out extensive research on the concerned stablecoins and submit a report of its findings to the House Committee within one year of the bill’s conversion to law.
Industry leaders, including Jeremy Allaire, the CEO of USD Coin issuer Circle, have voiced their concerns about this bill. In a tweet, Allaire said, “While comprehensive, there are clearly open and challenging issues with the bill as proposed, and now is the time for our country and political leaders to really dig in and get this right. The role of the dollar in the world is at stake.”
The proposed bill has caused a stir in the crypto industry, and some experts have raised concerns about its potential impact. Stablecoins have become increasingly popular in recent years as they offer a stable value and are often used as a bridge between fiat currency and cryptocurrencies. However, some critics argue that stablecoins pose a risk to financial stability and could be used for illicit activities such as money laundering and terrorist financing.
The proposed bill aims to address these concerns by imposing a ban on certain stablecoins and providing regulators with greater oversight. However, some experts argue that the bill could have unintended consequences and stifle innovation in the crypto industry. Others have pointed out that stablecoins backed by fiat currency, such as Tether and USD Coin, would not be affected by the proposed ban.
The debate over stablecoins and their regulation is likely to continue, and it remains to be seen whether the proposed bill will become law. The crypto industry is still in its early stages, and regulators around the world are grappling with how to balance innovation with consumer protection and financial stability. As the industry continues to evolve, it is likely that we will see more proposals for regulation and oversight.
