Algorithmic stablecoins similar to TerraUSD could be banned in the United States for two years if the bill, which seeks to regulate its issuance, is passed by Congress. The motion can be submitted by a committee to the House of Representatives and voted on as soon as next week.
The bill would make it illegal to issue or create “internally secured stablecoins,” Bloomberg Reported citing a copy of the proposal. The restriction will apply to stablecoins that can be traded, exchanged or exchanged for equivalent fiat money.
Regulations for stablecoins at the gates
After Terra (UST) crashed in May, concerns erupted in Washington about the trading of algorithmic stablecoins. UST has maintained a value equal to the US dollar through an algorithm, and it is traded alongside its sister token, Luna.
The failure of the UST ecosystem had a devastating ripple effect across the entire crypto industry, causing the demise of dozens of businesses, including lenders, crypto exchanges, and storage platforms, sending the market into a crypto winter, and a massive market crash for everyone. digital currencies.
Thousands of people lost their savings, both inside and outside the United States, prompting US politicians and policy makers to turn their attention to the operation and trading of stablecoins.
New Stablecoin projects will be subject to a filter
The bill suggests that all projects related to new algorithmic stablecoins must first be submitted for consideration in advance. The entity responsible for assessing the feasibility of the project will be the Treasury, in consultation with the Federal Reserve and other regulatory bodies, such as the Office of the Comptroller of the Currency (OCC), the Securities and Exchange Commission, and the Federal Commission. Deposit insurance company.
The publication said House Financial Services Committee Chairman Maxine Waters and ratings member Patrick McHenry are the main contributors to the stablecoin legislation.
Several people who have been briefed on legislative debates on the issue said it was not yet clear whether North Carolina Republican Rep. McHenry had approved the latest draft of the bill.
It was also suggested that the bill might undergo some changes before any discussion or vote on the final version could take place in the House.
Banks and other companies can still issue stablecoins
The bill also addresses the issue of banks and other companies in the sector that issue stablecoins. Previously, coin projects submitted by bank issuers had to be approved by federal regulators such as the OCC.
The legislative proposal states that the Federal Reserve should analyze and publish a set of guidelines for decision-making processes around requests for issuance of stablecoins by non-bank issuers.
The bill, which a House committee is expected to vote on next week, seeks to ensure that the important role of state regulators is preserved. This way, non-bank stablecoin issuers that pass state testing and register with the Federal Reserve within 180 days of approval can act on the bill.
In accordance with guidance from the latest White House guidance on digital assets, the bill directs the Federal Reserve to study the potential impact of the digital dollar (CBDC), as well as its implications for the financial system, banking sector, and the privacy of everyday life. Americans.