US Regulators Take Aim at Stablecoins
A bill has been drafted by the US Senate to regulate stablecoins. The initial legislation that will establish the legal basis for this form of digital currency is regarded by the cryptocurrency community as the first of its kind.
Lawmakers have presented their vision for a regulatory framework for stablecoins in a report entitled "Payment Stablecoins: The Future of Money and Banking," the result of a year-long investigation by the Senate Committee on Banking and Financial Affairs. Whether the bill will be passed in its first reading or undergo minor amendments remains unknown, but the final version will be adopted after hearings in committees, which are expected to take place soon.
Nonetheless, some conclusions can already be drawn regarding how lawmakers plan to regulate this "new type of financial asset."
Nonetheless, some conclusions can already be drawn regarding how lawmakers plan to regulate this "new type of financial asset."
Key provisions of the stablecoin bill
To spare you the inconvenience of studying a 73-page document, we have crafted a succinct summary of the essential concepts envisioned by American regulators.
1. The Senate is calling for the creation of a new federal agency that would oversee the regulation of all digital assets, including stablecoins. (Yes, you heard it right. The Senate is insisting on the establishment of yet another body that would oversee regulators.)
2. To ensure better control over stablecoins, a proposal has been made to create a licensing system for non-bank organizations that issue these digital assets. The Federal Digital Assets Agency, a newly established organization, is expected to be responsible for issuing licenses.
3. The proposal calls for a two-year halt in the issuance of new stablecoins until the US Treasury conducts a comprehensive risk assessment of their usage. It prompts the question of what the Treasury has been engaged in if not assessing the hazards of cryptocurrency circulation.
4. Requiring stablecoin issuers to create additional reserve assets to ensure the preservation of stablecoin value raises concerns that lawmakers may have a limited understanding of how stablecoins are pegged to fiat currencies.
5. The potential fines for violating the law have been revealed, with a penalty of $100,000 per day for operating without a proper license or sufficient reserve funds.
6. The Office of the Comptroller of the Currency (OCC) requires stablecoin issuers to submit monthly reports on the coins in circulation and their reserves.
7. If produced by an unlicensed or unregistered issuer with the Consumer Financial Protection Bureau, the sale or offering of stablecoins is prohibited.
8. The proposed legislation suggests granting states the authority to regulate stablecoins on their own, with the exception of situations where state laws contradict federal laws.
Stablecoins are mentioned multiple times in the proposed bill, with emphasis on their promising future prospects and potential positive impact on the US financial system.
Ah, this long-winded document can be boiled down to a snappy catchphrase: We absolutely love stablecoins and their potential, but let's make sure we have our regulatory claws in them, just in case. Long live heavy-handed regulation and let the strongest stablecoin survive, I suppose!
Ah, this long-winded document can be boiled down to a snappy catchphrase: We absolutely love stablecoins and their potential, but let's make sure we have our regulatory claws in them, just in case. Long live heavy-handed regulation and let the strongest stablecoin survive, I suppose!
