The US House of Representatives has failed to reach a consensus on the proposed legislation to regulate stablecoins, a type of digital asset that is backed by real-world assets or stablecoins. The bill, known as the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act, was introduced by Rep. Rashida Tlaib (D-MI) in December 2020 and aimed to protect consumers from the risks posed by stablecoins, such as volatility, fraud, and money laundering.
The bill would require stablecoin issuers to obtain a banking charter, comply with the same regulations as banks, and maintain reserves at the Federal Reserve. The bill would also give the Federal Reserve the authority to audit stablecoin issuers and impose penalties for non-compliance. The bill’s supporters argue that stablecoins pose a threat to the stability of the financial system and the sovereignty of the US dollar, and that they need to be regulated to prevent another financial crisis.
However, the bill has faced strong opposition from the stablecoin industry, as well as some lawmakers from both parties who believe that the bill is too restrictive and would stifle innovation and competition in the crypto space. They argue that stablecoins are not equivalent to bank deposits, and that they provide a faster, cheaper, and more inclusive alternative to traditional payment systems. They also claim that the bill would violate the constitutional rights of stablecoin users and issuers, and that it would create a monopoly for the Federal Reserve.
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The bipartisan negotiations on the bill have been ongoing for months, but they have reached an impasse in July 2023. The main points of contention are the definition of stablecoins, the scope of regulation, and the role of the Federal Reserve. The negotiators have failed to find a compromise that would satisfy both sides and have decided to end the talks without reaching an agreement.
The breakdown of the negotiations means that the bill is unlikely to pass in its current form, and that stablecoins will remain largely unregulated in the US for the foreseeable future. This could have significant implications for the stablecoin market, which has grown rapidly in recent years and now has a total market capitalization of over $200 billion. Some experts predict that stablecoins will continue to flourish in the absence of regulation, while others warn that they will face increased scrutiny and legal challenges from regulators and lawmakers.
In a similar twist, the US House Agriculture Committee has approved a bill that would create a regulatory framework for the crypto market. The bill, called the Digital Asset Market Structure and Investor Protection Act, aims to protect investors, promote innovation, and provide clarity for digital asset issuers and intermediaries.
The bill would define digital assets as securities, commodities, or digital asset securities, depending on their characteristics and use cases. It would also establish a federal digital asset regulator within the Securities and Exchange Commission (SEC) to oversee the crypto market and coordinate with other agencies.
The bill would also require digital asset issuers and intermediaries to register with the SEC and comply with reporting, disclosure, and anti-money laundering rules. Additionally, the bill would create a digital asset investor protection fund to compensate investors in case of fraud or theft.
The bill’s sponsor, Representative Don Beyer, said that the crypto market is growing rapidly and needs a clear and consistent regulatory framework. He said that his bill would provide certainty for innovators, protect consumers, and ensure the US remains a global leader in the crypto space.
The bill has received support from several industry groups, such as the Blockchain Association, the Chamber of Digital Commerce, and Coin Center. They praised the bill for recognizing the diversity of digital assets and creating a balanced approach to regulation.
However, the bill has also faced some criticism from some crypto advocates, who argued that the bill would stifle innovation and impose unnecessary burdens on the crypto industry. They said that the bill would give too much power to the SEC and create confusion for state regulators. The bill will now move to the full House for consideration. If passed, it will then need to be approved by the Senate and signed by the President before becoming law.