The US Congress has recently released a discussion draft of the 118th Congress First Session, outlining the requirements for becoming a payment stablecoin issuer. The draft emphasizes that the bill will later be passed by the US Senate and House of Representatives.
The primary objective of the draft is to establish the minimum requirements necessary for considering the legal status of a stablecoin issuer. According to the draft, an approved subsidiary of an insured depository institution, as well as a licensed non-bank entity, could be allowed to issue stablecoins. However, the draft provides a detailed outline of the legal procedures that the entities must fulfill to become approved.
The subsidiary seeking approval is required to file an application and adhere to all the laws. The draft also states that non-bank entities must undergo a specific course of action, which includes publishing a notice in a circulating newspaper after submitting the application.
Congress has invited public attention to the restrictions imposed on stablecoin issuers. It has stated that the stablecoins must be fully backed by assets, and the issuer must maintain a reserve account. Furthermore, the issuer must comply with all applicable laws and regulations, including anti-money laundering and counter-terrorism financing laws.
The draft also notifies the legal actions that will be taken against institutions or individuals who are found non-compliant with the bill. According to the law, those who knowingly participate in the violation of the rule “shall be fined not more than $1,000,000, imprisoned for not more than 5 years, or both.”
This move by the US Congress has been seen as a significant step towards regulating the cryptocurrency industry. Stablecoins have become increasingly popular in recent years, with many companies developing their own stablecoins. However, the lack of regulation has led to concerns about the stability and security of these digital assets.
The proposed regulations aim to address these concerns by ensuring that stablecoins are backed by assets and that issuers comply with all applicable laws and regulations. This will help to protect investors and ensure the stability of the cryptocurrency market.
The draft has received mixed reactions from the cryptocurrency community. Some have welcomed the move towards regulation, while others have expressed concerns that the regulations may stifle innovation and growth in the industry.
Overall, the release of this discussion draft is a significant development in the regulation of stablecoins. It highlights the importance of ensuring that digital assets are backed by assets and that issuers comply with all applicable laws and regulations. The bill is expected to be passed by the US Senate and House of Representatives in the near future, and it will be interesting to see how the cryptocurrency industry responds to these new regulations.