US Congress Presents Stablecoin Bill Draft. What You Need to Know
The U.S. House Financial Services Committee has released a draft bill proposing to regulate stablecoins. The draft bill is set to be discussed at a hearing on April 19th by the House Financial Services Committee, marking the first significant case of cryptocurrency legislation in 2023
The proposed legislation comes after two significant incidents involving stablecoins over the past year, namely the crash of terraUSD (UST), backed by a token called LUNA, and the temporary unpeg of the second-largest stablecoin, USD coin (USDC), from $1.
The draft bill is expected to create a comprehensive regulatory framework for stablecoins. The draft bill, released with no official notice on Saturday, is expected to be debated and amended in the coming weeks and months.
The bill proposes that the Federal Reserve would be in charge of non-bank stablecoins, which means that the U.S. central bank would approve and regulate non-bank companies like Circle and Tether. Those institutions seeking to issue stablecoins would fall under the appropriate federal banking agency supervision.
Failure to register would be punishable by up to five years in prison and a $1 million fine. Any issuer that wants to do business in the U.S., regardless of where the company is based, would need to register. The bill's provisions include a moratorium on stablecoins backed by other cryptocurrencies, a study on the potential impact of a central bank digital currency, and a ban on new stablecoins without fiat backing.
Meanwhile, the CEO of Circle (which issues USDC) Jeremy Allaire, tweeted that there is clearly a need for deep, bipartisan support for laws that ensure digital dollars on the internet are safely issued, backed, and operated.
Another prominent supporter of this initiative is Denelle Dixon, Stellar’s CEO and Executive Director. Last week during a Bloomberg interview, he stated that the United States has no choice but to regulate the stablecoins industry by the end of this year.
The hearing on the draft stablecoin bill, which is set to be held on April 19, will feature representatives from Circle, the Blockchain Association's Jake Chervinsky; Columbia Professor Austin Campbell, and New York Department of Financial Services Superintendent Adrienne Harris.
