The U.S. House of Representatives Financial Services Committee has released a discussion draft of a groundbreaking stablecoin bill ahead of Saturday’s congressional hearing.
The draft, available on the committee’s hearings webpage, represents the first major legislative move on cryptocurrencies in 2023. It creates a definition for paying stablecoin issuers, echoing the term used by former Senator Pat Toomey in his Stablecoin Act of 2022. The bill also calls for a moratorium on new stablecoins backed by other types of tokens, until further research can be performed.
Additionally, it urged federal regulators to study the potential impact of a central bank digital currency issued by the Federal Reserve. The House Financial Services Subcommittee on Financial Technology will hold a hearing on stablecoins on Wednesday, with speakers including Circle’s Dante Disparte, Blockchain Association’s Jake Chervinsky, Columbia University’s Professor Austin Campbell and New York’s Department of Financial Services Adrienne Harris.
The draft bill, called the Stablecoin Stability Act, aims to provide regulatory clarity and oversight to the fast-growing stablecoin market, which has attracted widespread attention and raised concerns about financial stability, consumer protection and national security potential.
The bill seeks to establish a comprehensive regulatory framework for stablecoins, addressing key areas such as issuer requirements, reserve requirements, consumer protection, and regulatory oversight.
Under the proposed bill, stablecoin issuers would need to obtain a federal charter and be subject to prudential oversight by appropriate federal regulators. The bill also requires stablecoin issuers to maintain a 1:1 reserve of the underlying assets backing the stablecoin and conduct regular audits to ensure transparency and accountability.
In addition, the bill also includes provisions to protect consumers, such as requiring stablecoin issuers to disclose clear and comprehensive information on the risks associated with stablecoins, and providing consumer redress mechanisms in the event of disputes or losses.
One notable aspect of the draft bill is that it calls for a temporary moratorium on new stablecoins backed by other types of tokens. The regulation is intended to address concerns about potential risks and uncertainties associated with stablecoins backed by less stable or less regulated assets such as cryptocurrencies or other tokens.
The bill requires stablecoins to be backed only by fiat currency or deposits held at insured depository institutions until further research can be conducted to assess the risks and benefits of backing other types of assets.
Another important aspect of the draft bill is its focus on examining the potential impact of a central bank digital currency (CBDC) issued by the Federal Reserve. The bill recognizes the growing global interest and momentum in CBDCs and calls for federal regulators to conduct research and analysis of the potential benefits, risks, and implications of a U.S. CBDC.
