Uncle Sam’s Stablecoin Rodeo: Roping in the Digital Currency Market

The bipartisan stablecoin bill proposes Federal Reserve regulation and state oversight, shaping the future of digital assets.

Man on uncle Sams hat with a pile of coins.
Created by Kornelija Poderskytė from DailyCoin
  • The United States House Financial Services Committee has unveiled a third bipartisan stablecoin bill.
  • This bill could set a precedent as the first comprehensive crypto legislation in the United States.
  • The latest version has expanded the federal regulator’s authority.

The House Financial Services Committee of the United States has unveiled the third iteration of the stablecoin bill, spearheaded by Representative Patrick McHenry, who chairs the committee. Exhibiting a bipartisan character, this latest draft incorporates proposals contributed by both Republican and Democratic committee members.

Titled “The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem,” the bill was initially introduced on June 8 and is slated for deliberation during the forthcoming committee hearing on June 13.

US Federal Reserve to Spearhead Stablecoin Regulation

The bill’s current version proposes designating the U.S. Federal Reserve as the primary regulatory body responsible for formulating requirements pertaining to the issuance of stablecoins. 

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However, concurrently, it seeks to grant state regulators the authority to oversee the companies engaged in token issuance.

Furthermore, the bill delves into the legislation concerning the entities permitted to issue stablecoins and outlines the prerequisites for a payment stablecoin. 

Should it receive approval, this bill would mark the inaugural comprehensive framework governing the supervision and enforcement of stablecoin markets within the United States.

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Notably, the bill proposes a two-year moratorium on collateralized stablecoins from the date of enactment.

US on the Verge of Transformative Crypto Legislation Milestone

If the committee endorses the bill and subsequently garners passage in the U.S. House of Representatives and the Senate, it would emerge as the pioneering piece of crypto legislation in the United States.

The latest rendition bestows additional authority upon the federal regulator compared to its previous version. 

These augmented powers encompass the ability to intervene in emergencies involving state-regulated issuers. Additionally, states would retain the option to transfer their supervisory responsibilities to the federal watchdog if required.

In its preceding version, released on April 24, the draft bill primarily concentrated on stablecoin payments rather than extending its purview to other facets of digital asset markets, such as custodial service providers and algorithmic stablecoins. 

On the Flipside

  • The U.S. Federal Reserve as the primary regulator for stablecoins could concentrate too much power in a single entity and potentially stifle innovation in the digital asset ecosystem.
  • The proposed two-year moratorium on collateralized stablecoins could hinder market development and impede the ability of companies to innovate within the stablecoin space.
  • Focusing primarily on stablecoin payments in the earlier version of the bill overlooked crucial aspects of the digital asset markets.

Why This Matters

If enacted, this bill would shape the future of stablecoin issuance and set a precedent for crypto legislation in the United States, influencing the broader digital asset ecosystem and highlighting the growing importance of regulatory clarity in the crypto space.

To learn more about the proposed bill and its potential impact on stablecoin issuers, read here:

House Bill Regulatons: Can Stablecoin Issuers Survive the Proposed Bill?

To stay updated on the second attempt at stablecoin legislation by House Republicans, check out this article:

House Republicans’ Second Attempt at Stablecoin Legislation

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.