Congress’s draft stablecoin bill would require the Federal Reserve System and state banking regulators to approve any non-bank entity’s stablecoin plans before they can be legally issued.
Stablecoin issuers approved by state regulators must register with the Federal Reserve within 180 days to legally continue their operations, the media said. Report Dr. demanded access to the draft bill on Wednesday.
In July, CryptoPotato Report that the stablecoin was billed delayed For more than a month, a last-minute change proposed by Treasury Secretary Janet Yellen. He argued that the law should provide for the separation of customers’ assets from wallet custodians to preserve them in a bankruptcy situation.
In June, Japan passed a similar bill recognizing stablecoins as digital money which must be pegged to the yen or other legal tender.
Algo Stablecoins will be banned
New stablecoins backed by assets created by the same issuer or “internally parallel stablecoins” will not be allowed for at least the next two years. Any such existing stablecoins must change their business model and obtain new approvals from the appropriate authorities within two years.
Stablecoins issued without proper approval by designated regulators will be illegal and punishable by up to five years in prison and a $1-million fine. The bill envisions such cryptocurrencies being collateralized by cash or highly liquid assets such as treasury bonds.
The draft legislation aims to create a regulatory framework around stablecoins and asks the Federal Reserve to study the economic impact of the US digital dollar (CBDC). It mandated a study on algorithmic stablecoins in consultation with the Fed, the Federal Deposit Insurance Corporation, the OCC and the Securities and Exchange Commission.
Banks require approval from regulators
Banks and other traditional financial institutions would need the approval of federal banking regulators — the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation — the draft law says, according to media reports.
It also addresses issues of stablecoin interoperability and delegates standard-making power to federal banking regulators and state watchdogs. The bill aims to bring stablecoin assets and accounting standards in line with banks and credit unions.
The draft law prohibits the commingling of customers’ funds and their keys with stablecoins and other assets so that users can quickly redeem their investments in the event of insolvency or bankruptcy.
It can come up for a vote at any time
The draft bill is under discussion between House Financial Services Committee Chair Maxine Waters and Representative Patrick McHenry. There is still the possibility of this changing as it has not yet been signed by Waters and McHenry.
Although a markup date has yet to be set, the committee could vote on the bill as early as next week because it only has until the end of the current year to consider it and there is not much room for the upcoming midterm elections. Delay it further.
