New US legislation to bring stablecoin activities under government control
Three US legislators, Congresswoman Rashida Tlaib, Congressman Jesús Chuy García and the chair of the Representative of the Financial Technology Task Force, Stephen Lynch, presented a new legislation to Congress that, if approved, it would subject all activities related to stablecoins to the control of many governments.
According to a Rashida Talib press release on Wednesday, December 2, the bill, dubbed the 'Stable Coin Anchor and Banking License Enforcement Act (STABLE)', aims to 'protect consumers from the risks they pose. emerging digital payment instruments like Facebook's Libra. ' and other Stablecoins currently offered on the market, regulating their issuance and related business activities.
According to the draft of the bill:
"It will be illegal for any person to issue a stablecoin other than an insured depository institution that is a member of the Federal Reserve System." It would be illegal for anyone to engage in any trading activity related to stablecoins “without obtaining advance written approval on an ongoing basis from the appropriate federal banking agency, the Corporation, and the Board of Governors of the Federal Reserve System. «
Further, stablecoin issuers are required to notify and obtain approval from many government agencies 6 months prior to the issue date.
They also have to obtain insurance from the Federal Deposit Insurance Corporation (FDIC) or have to hold reserves in the Federal Reserve to ensure that all stablecoins can be easily converted into US dollars on demand.
According to Rashida Tlaib, the Stable Law aims to protect people of color and other minority groups who lack access to regulated financial services. She said:
“From the OCC to the Federal Reserve to the peddlers of stablecoins, the protections that the STABLE Act would make possible are more needed than ever in the midst of a pandemic that will lead to riskier financial decisions out of necessity because our federal government continues to fail everyone. by failing to provide adequate relief legislation. I thank Congressman Garcia and President Lynch for co-leading this important effort to make these protections a reality. "
Experts appreciated this bill saying it addressed the growth of shadow payments and shadow banking, but was met with strong disapproval from the crypto community. A Chainlink Community Ambassador with account name ChainLinkGod.eth, at reply to Rashida Tlaib, wrote:
“How is it that stablecoins have disenfranchised low-income or PoC people? in fact, they have done the exact opposite by providing equal access to financial services regardless of who you are. This bill will do the exact opposite of what you say it will do, please inquire.
Jeremy Allaire, Co-Founder and CEO of Circlepay, express his comments in a long Twitter thread. He believes that the STABLE Act would be a huge step backwards in digital currency innovation in the United States, limiting the progress of both the blockchain industry and financial technology.
“Forcing crypto, fintech and blockchain companies to the huge regulatory burdens of regulation and supervision from the Federal Reserve and the FDIC is inconsistent with the goals of supporting innovation in the fair and inclusive delivery of payments that come from the stable coins'.
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