- Another stablecoin regulation plan is circulating around Washington
- The new plan would see financial regulators put in charge of authorizing new stablecoins
- A House Financial Services Committee hearing on Wednesday will discuss the subject
A new draft bill on stablecoins has been released by the House Financial Services Committee, signaling another attempt by members of the U.S. House of Representatives to establish a comprehensive regulatory framework for stablecoins such as USDC and Tether. The draft bill was released without official notice on Saturday, ahead of a scheduled hearing on the topic by the committee’s new panel on digital assets and financial technology on Wednesday. The bill would be the latest attempt by lawmakers to regulate stablecoins and keep up with other countries that are implementing similar rules.
Issuers Would Face Regulatory Approval
Under the proposed plan, non-bank companies such as Circle and Tether that currently issue stablecoins in the U.S., or intend to do so, would be subject to approval and regulation by the country’s central bank. Banks and credit unions that wish to issue their own stablecoins would require authorization from their respective primary financial regulator, which could be either the National Credit Union Administration, Federal Deposit Insurance Corporation, or the Office of the Comptroller of the Currency.
Failure to register would result in a maximum penalty of five years in prison and a fine of $1 million.
The plan also proposes that stablecoins not supported by a tangible asset would be prohibited for a period of two years, mandating that the Treasury Department undertake a study on “endogenously backed” stablecoins. Any existing tokens that were already in circulation prior to the bill becoming law would be exempted from the new regulations.
Political Divide Preventing Cohesive Policy
The proposed legislation would also empower banking regulators and the National Institute of Standards and Technology to establish standards for interoperability between stablecoins. This would ensure that users can easily transact across various payment systems without needing to purchase native stablecoins for each platform. The interoperability standards would include mandatory technical and legal specifications.
Discussions stalled over stablecoin regulation last year before the midterm elections and the FTX collapse, due to differences between congressional Republicans, Democrats, and the Biden administration. The Securities and Exchange Commission provided technical advice on the subject and has started investigating stablecoins as securities offerings, which has resulted in further scrutiny of the sector.
