Ahead of this week’s congressional hearings, Rep. Maxine Waters, a Democrat from the U.S. House of Representatives, released her proposed draft stablecoin legislation.
The newly published bill addresses key aspects such as licensing requirements for issuers, reserve assessments, and stablecoin regulations in relation to other cryptocurrencies.
Notably, the proposed legislation would not alter the current responsibilities or powers of the Treasury Department, the Consumer Financial Protection Bureau, the Securities and Exchange Commission, or the Commodity Futures Trading Commission.
A few weeks ago, Waters highlighted the need for lawmakers to start from scratch when it comes to stablecoin legislation. The new draft stipulates that institutions seeking to issue stablecoins must submit their applications through “the appropriate federal payments stablecoin regulator.”
Designated regulators include the Federal Reserve Board, the Office of the Comptroller of the Currency, the National Credit Union Administration, and the Federal Deposit Insurance Corporation (FDIC).
Approval considerations include the issuer’s ability to maintain reserves, the benefits offered to the public, and the issuer’s commitment to promoting financial inclusion.
While issuers can apply through state regulators, the Fed retains the power to “publish rules” for all parties involved, allowing it to deny registration of state-level payment stablecoins at the federal level.
In related news, the U.S. House of Representatives Subcommittee on Digital Assets is scheduled to hold a stablecoin-focused hearing on May 18.
The upcoming hearings aim to delve into the complex situation surrounding stablecoins to facilitate a better understanding of their potential impact on the economy, financial markets, and consumer protection. Industry experts, regulators and stakeholders are expected to present their insights and recommendations at the hearing, which will seek to strike a balance between promoting innovation and safeguarding the public interest.
The launch of Representative Waters’ draft stablecoin legislation marks a positive step toward addressing the regulatory challenges associated with this nascent asset class. The proposed bill reflects policymakers’ growing recognition that stablecoins require robust oversight to maintain market integrity and protect the interests of consumers and investors.
Industry experts and stakeholders have expressed differing opinions on the appropriate regulatory framework for stablecoins. Some advocate a balanced approach that encourages innovation while mitigating risk, while others emphasize the need for rigorous oversight and safeguards against potential threats to the financial system.
The upcoming hearings will provide a platform for constructive dialogue, allowing lawmakers to gain a deeper understanding of the complexities of stablecoins and their potential impact. The outcome of the hearing is expected to inform the development of comprehensive stablecoin regulations that strike the right balance between promoting innovation, ensuring consumer protection, and maintaining financial stability.
As the debate surrounding stablecoin regulations intensifies, the introduction of draft legislation representing Waters lays the groundwork for a robust legislative process. Stakeholders from a variety of industries, including financial institutions, technology companies, and consumer advocacy groups, are closely monitoring these developments and are expected to actively participate in the ongoing discussions.