US lawmakers propose regulation of stablecoins

A bill has been introduced in the U.S. Congress requiring stablecoin issuers to obtain banking licenses and regulatory approval. The initiative is led by a group of lawmakers headed by Democratic Representative Rashida Tlaib.

Preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of color traditional big banks have is critically important. That’s why I’m proud to introduce the #STABLEAct with @RepChuyGarcia and @RepStephenLynch. https://t.co/yorQPo6wz4

— Congresswoman Rashida Tlaib (@RepRashida) December 2, 2020

The document is designed to protect users from risks associated with digital payment instruments. As an example, the lawmakers cited the Libra stablecoin.

“Digital currencies whose value is pegged or stabilised to traditional currencies such as the dollar pose new regulatory challenges and represent a growing source of risk to the market, liquidity and credit risk,” the bill says.

The sponsors propose requiring stablecoin issuers to obtain approvals from the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the banking regulator.

A condition of approval would be FDIC insurance or the maintenance of reserves to ensure the rapid conversion of funds into dollars.

Circle CEO Jeremy Allaire called the bill a “huge step backward” for digital currency innovation in the United States. In his view, the measure would constrain the development of blockchain technology and the fintech industry.

1/8 The STABLE Act would represent a huge step backwards for digital currency innovation in the United States, limiting the accelerating progress of both the blockchain and fintech industry.

— Jeremy Allaire (@jerallaire) December 2, 2020

The head of ShapeShift, Erik Voorhees, urged lawmakers not to force cryptocurrency to “act like banks”.

Tlaib — crypto is the antithesis of all the banking problems you rightly highlight. Let’s not force crypto to act like the banks maybe? (and indeed, it can’t, and won’t) https://t.co/ZcONRQiU0m

— Erik Voorhees (@ErikVoorhees) December 3, 2020

Wyoming state representative and cryptocurrency advocate Tyler Lindholm said the bill runs counter to the fundamental principle of decentralisation.

Centralization of power for a decentralized world. No thanks. This industry has been light years more successful in bringing financial freedom to the unbanked and that happened without cronyism as suggested in this bill. https://t.co/vLCkhHMWD7

— Tyler Lindholm (@Tyler_Lindholm) December 3, 2020

The lawmakers noted that Tlaib had been among critics of the head of the Office of the Comptroller of the Currency (OCC), Brian Brooks. In a letter, Members of Congress stated that the OCC pays close attention to cryptocurrencies.

Stable Act by ForkLog on Scribd

Earlier, Congresswoman Sylvia Garcia proposed a bill that would classify stablecoins as securities.

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