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The United States Congress is set to discuss a new bill geared towards providing requirements for payment stablecoin issuers, and research on a digital dollar.
The United States Congress is preparing to issue more clarity on digital assets in the stablecoins market. The ballooning stablecoins industry experienced one of the worst crypto calamities during the Terra Luna UST collapse after more than $40 billion was wiped out of the industry. As a result, the United States federal government has issued several guidelines against algorithmic stablecoins similar to the Cardano-based DJED.
Late last week during a Bloomberg interview, Stellar Development Foundation CEO and Executive Director Denelle Dixon stated that the United States has no choice but to regulate the stablecoins industry by the end of this year. Furthermore, the United States is risking losing its edge as a financial and technology hub due to a lack of digital assets regulatory framework.
US Congress on Stablecoins
The United States Congress is set to discuss a new bill geared towards providing requirements for payment stablecoin issuers, and research on a digital dollar. The new bill released by the House Financial Services Committee puts the United States dollar at the centre stage for stablecoins development. Furthermore, stablecoins issuers are expected to get regulatory approvals from respective financial regulators including the National Credit Union Administration, Federal Deposit Insurance Corp., or Office of the Comptroller of the Currency.
Failure to register with respective financial regulatory agencies on stablecoins issuance will attract a fine of not more than $1 million or a five-year jail term. Interestingly, the newly drafted Congress bill includes a two-year ban on algorithmic stablecoins.
The bill notes that stablecoins payments are not secured by the United States federal deposits insurance corporation.
“Payment stablecoins are not backed by the full faith and credit of the United States, guaranteed by the United States Government, subject to deposit insurance by the Federal Deposit Insurance Corporation, or subject to share insurance by the National Credit Union Administration,” the bill noted.
Meanwhile, the bill intends to direct the Fed to study the feasibility of a digital dollar amid the launch of FedNow.
The Congress draft bill on stablecoins comes ahead of this week’s full Financial Services Committee meeting to hear from Securities and Exchange Commission (SEC) Chair Gary Gensler.
Additionally, a House Financial Services subcommittee will hold a hearing on stablecoins on Wednesday, featuring Dante Disparte from Circle Internet Financial, the Blockchain Association’s Jake Chervinsky, Columbia Professor Austin Campbell, and New York Department of Financial Services Superintendent Adrienne Harris.
Another bitcoin ETP disapproval. Commissioner Uyeda and I dissented: https://t.co/fgUOHdN3NN
— Hester Peirce (@HesterPeirce) March 10, 2023
This comes as the SEC commissioners get divided on the way forward with the digital assets regulatory framework. For instance, SEC commissioner Hester Peirce has disagreed with Gensler on several instances including Bitcoin ETPs.