The U.S. House Financial Services Committee has released a discussion draft of a bill that could have a significant impact on the stablecoin industry. The draft, which is available on the Committee’s hearing page, marks the first major piece of crypto legislation to emerge in 2023. The bill creates definitions for payment stablecoin issuers, using a term coined by former Senator Pat Toomey (R-Pa.) when he introduced his own stablecoin bill in 2022. Additionally, the bill calls for a moratorium on new stablecoins that are backed by other types of tokens until a study can be conducted. Federal regulators are also being asked to study the potential impact of a central bank digital currency issued by the Federal Reserve.
The publication of the bill was first reported by Punchbowl News. A House Financial Services subcommittee is scheduled to hold a hearing on stablecoins on Wednesday, with Circle’s Dante Disparte, the Blockchain Association’s Jake Chervinsky, Columbia Professor Austin Campbell, and New York Department of Financial Services Superintendent Adrienne Harris all set to testify. The hearing will take place the day after the full Financial Services Committee meets to hear from Securities and Exchange Commission Chair Gary Gensler.
The draft bill is expected to generate significant debate and discussion within the crypto community. Some industry insiders have expressed concern about the potential impact of the proposed moratorium on new stablecoins. Others have praised the bill’s focus on increasing regulatory oversight and transparency in the stablecoin market.
Stablecoins are digital currencies that are designed to maintain a stable value relative to a particular asset or basket of assets. They have become increasingly popular in recent years as a way to facilitate transactions and store value without the volatility associated with other cryptocurrencies. However, stablecoins have also been the subject of controversy, with some critics arguing that they pose a systemic risk to the financial system.
The proposed bill seeks to address some of these concerns by providing a clear regulatory framework for stablecoin issuers. Under the bill, payment stablecoin issuers would be required to obtain a license from the Federal Reserve and comply with a range of regulatory requirements, including anti-money laundering and counter-terrorism financing measures. The bill also establishes a new regulatory body, the Stablecoin Oversight Board, which would be responsible for overseeing the stablecoin market and ensuring compliance with these regulations.
In addition to these regulatory measures, the bill also calls for a study of the potential impact of a central bank digital currency (CBDC) issued by the Federal Reserve. CBDCs are digital versions of fiat currencies that are issued and backed by central banks. Proponents argue that CBDCs could offer a range of benefits, including increased financial inclusion, reduced transaction costs, and enhanced monetary policy tools. However, critics have raised concerns about the potential risks associated with CBDCs, including the impact on privacy and the potential for increased government surveillance.
The publication of the stablecoin bill comes at a time of increasing regulatory scrutiny of the crypto industry. In recent months, regulators around the world have taken steps to tighten oversight of cryptocurrencies, with a particular focus on stablecoins. In the United States, the Securities and Exchange Commission has taken action against a number of stablecoin issuers, alleging that they violated securities laws by offering unregistered securities. The proposed bill is likely to add to this regulatory pressure, and could result in significant changes to the stablecoin market in the coming years.
Overall, the stablecoin bill represents a significant development for the crypto industry. While the bill is still in draft form and is likely to undergo significant revisions before it becomes law, it provides a clear indication of the direction that regulators are likely to take in the coming years. As the crypto industry continues to evolve, it is likely that we will see increasing regulatory scrutiny and oversight, with a particular focus on stablecoins and other digital currencies that are designed to maintain a stable value.