New Congress Bill Aims To Regulate Stablecoins: Report

A new Congress bill aims to regulate stablecoins which means it will make it illegal to use stabelcoins in the USA without federal approval so let’s find out more in today’s crypto news.

The STABLE act will require stabelcoin issues to meet the new regulatory requirements just as banks do. The new congress bill was proposed by Representatives Rashida Tlaib, Stephen Lynch, and Jesus Garcia but it was not assigned to a committee. The trio of Democratic lawmakers introduced the bill that will regulate stablecoins and will include Facebook’s Diem or formerly known as the Libra cryptocurrency.

I'm thrilled to share the announcement of @RashidaTlaib's new "Stablecoin Tethering & Bank Licensing Enforcement (STABLE) Act", (#STABLEAct) cosponsored by @ChuyForCongress & Chair of the House Financial Services Committee's Fintech Task Force, @RepLynch.https://t.co/3akI6QPLbd

— Rohan Grey (@rohangrey) December 2, 2020

Congresswoman Rashida Tlaib along with Stephen Lynch and Jesus Garcia announced the new Stablecoin Tethering and Bank Licensing Enforcement act. The STABLE act will require stablecoin issuers to have a banking charter and to earn regulatory approval from the FDIC, the Federal Reserve, and other agencies before issuing the coin. They have to be FDIC-insured or to maintain an equivalent number of dollars at the Federal Reserve. There’s a high threshold to meet as well. Also, all stablecoins in USA and their issuers to have a banking charter and earn regulatory approval from all agencies before issuing the coin but will also have to maintain an equivalent number of USD at the Federal Reserve.

The so-called “crypto Banks” earned their bank charters in Wyoming and they are all going through a state-level process that is not regulated by the Office of the Comptroller of the Currency like the national banks are. The FDIC doesn’t allow for insurance on crypto assets as well. The press release notes that:

“COVID-19 Pandemic has exposed numerous barriers to accessing and utilizing mainstream financial institutions” but the authors were clear that they don’t want for some bad actors to take advantage of the low and middle-income Americans. It namechecks “shadow banks” and other financial companies that are not regulated like banks but they can issue loans and other products. Representative Lynch noted:

 “Stablecoins present a new and innovative way for consumers to use their money and I believe this technology can be used to make financial transactions more efficient while potentially increasing financial inclusion.”

Lynch and his colleagues likely want to turn the crypto providers into banks, but the community will most likely disagree.