Control of stablecoins: US politicians overrule SEC advice

Despite the warning of the boss of the SECthe House of Representatives of United States examines a new bill framing the stablecoins. This one foresees in particular a ban of chips not backed to a fiat currency.

The boss of the U.S. securities regulator, Gary Gensler, is certainly not in favor of a regulatory developments to frame cryptocurrencies. For the latter, Congress could, on the contrary, weaken the regulation.

The United States House of Representatives does, however, appear ready to take action, focusing initially on stablecoins. The Financial Services Committee is currently considering a new bill.

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Circle and Tether under the supervision of the Fed

This is still a working draft. There is no guarantee that the text will actually be the one proposed to elected officials in the next few weeks. The bill will have to continue its legislative journey.

The bill proposes several measures to address stablecoins. First, it advocates placing the issuers of these tokens, such as Circle and Tether, under the supervision of the central bankthe Federal Reserve.

At least as long as the issuers are not banks. The approval of stablecoins issued by banks would depend on the competent authorities (National Credit Union Administration, Federal Deposit Insurance Corp or the Office of the Comptroller of the Currency).

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Those who fail to register with the authorities could face up to five years in prison and a fine of one million dollars. And pre-registration applies to any issuer offering its services in the US, regardless of its location.

2-year ban on certain stablecoins

The legislator also recommends in his draft to prohibit stablecoins not backed by fiat currency. The ban would be temporary, lasting two years while the Treasury Department conducts a study. Tokens already issued would be grandfathered.

The House of Representatives is also considering giving the government the ability to define interoperability standards – through the banking industry regulators and NIST. These common standards are intended to enable settlement and clearing between different payment systems.

Finally, if the bill were to succeed in its current form, it would give Congress and the President authority over the Fed to direct it to study the effects of issuing a digital dollar.

The legislation would provide guidance, such as studying the potential impacts on monetary policy and financial stability of a CBDC.

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