The U.S. House of Representatives Financial Services Committee released a draft stablecoin bill on Saturday, with proposals including a moratorium on the use of stablecoins in other cryptocurrency reserves and a study of central bank digital currency (CBDC) requirements. A related hearing will be held on Wednesday, and Dante Disparte, global chief strategist of stablecoin issuer Circle, Jake Chervinsky of the Blockchain Association, Columbia University professor Austin Campbell and New York Department of Financial Services Director Adrienne Harris will all participate as witnesses.
The origin of the Stablecoin Act
Back in November 2021, the President’s Working Group on Financial Markets (PWG) released a report on stablecoins. The report contains a proposed federal regulatory framework to address existing and potential risks to stablecoins and recommends immediate legislation to Congress.
Beginning in the spring of 2022, Democratic and Republican committee staff began working on legislation to establish a federal framework for issuing stablecoins. The framework hopes to ensure that issuers have a legal way to issue stablecoins, and that federal financial regulators have the authority to address related issues, including risks to stablecoin users, risks of stablecoin runs, and systemic risks. Staff from the Treasury Department, the Federal Reserve, and the Office of the Comptroller of the Currency (OCC) also provided technical assistance in the process. In September 2022, the committee shared a draft and received a lot of important feedback.
Requirements for Stablecoin Issuers
The newly released draft clearly states at the outset that any issuer that wants to launch stablecoin business in the United States, regardless of where the company is located, needs to register. And disclose information such as its business operations and risk management plans to relevant authorities. Additionally, they need to retain sufficient funds to support the stablecoins they issue. In addition, the bill also provides for enforcement measures and penalties (less than one million U.S. dollars and/or up to 5 years in prison) to ensure that payment stablecoin issuers comply with the relevant regulations.
Studying the feasibility of a digital dollar
The draft also requires the Federal Reserve to conduct a study on the digital dollar and submit a report to Congress on the central bank’s digital currency CBDC. The report should include information on the design, implementation and risk management of central bank digital currencies.
In addition, other provisions are mentioned in the draft. For example, developing interactivity standards to ensure that different stablecoins can be exchanged with each other. Additionally, the bill prohibits the use of stablecoins backed by other cryptocurrencies (such as algorithmic stablecoins).
The hearing will be held on Wednesday and will involve Circle and NYDFS
The House Financial Services Subcommittee will hold a hearing on stablecoins on Wednesday, with Dante Disparte, global chief strategist of stablecoin issuer Circle, Jake Chervinsky of the Blockchain Association, Columbia University professor Austin Campbell and New York Department of Financial Services Director Adrienne Harris. Will participate as a witness.
This draft may not be the final version of the stablecoin bill, as debate and negotiations will continue in Washington in the coming weeks and months. But if this bill is passed, it will have a great impact on stablecoin issuers and may cause changes in the cryptocurrency market.
This article The U.S. House of Representatives released a draft stablecoin bill, proposing to suspend the use of cryptographic reserve stablecoins and urging research on CBDC. First appeared on Chain News ABMedia.
