Three U.S. congressmen have introduced new legislation to regulate stable cryptocurrencies, including Facebook’s Diem project, formerly known as Libra.
Rashida Tlaib, Jesus Garcia and Stephen Lynch were involved in the drafting of the Stable Coin Pegging and Bank Licensing Act (STABLE). The bill should “protect consumers from the risks associated with new digital payment instruments such as Facebook’s Libra and other stablecoins available in the market. It will regulate the issuance of stablecoins and related commercial activities. ”
Congressmen are proposing to oblige companies that issue stablecoins to obtain a banking license in the United States, as well as the approval of the US Federal Reserve and other regulators. When issuing stable cryptocurrencies, companies will need to keep collateral with Fed banks, as well as obtain insurance from the Federal Deposit Insurance Corporation (FDIC). Interestingly, the FDIC currently does not provide insurance for cryptocurrency assets.
At the same time, the authors of the bill emphasize that in the context of the COVID-19 pandemic, many citizens have lost access to financial institutions and banking services. Despite this, it is necessary to protect consumers from scammers who can use digital assets to defraud US citizens. Stephen Lynch stated:
“Stablecoins represent a new and innovative way of using funds for consumers, and I believe that this technology can make financial transactions more efficient and also increase the availability of financial services. However, we must not allow private companies to issue US currency. The STABLE bill will ensure that our regulators can effectively monitor the use of this technology. ”
The document provoked an immediate negative reaction from representatives of the cryptocurrency community. Jeremy Allaire said the bill represents a significant step backward for digital currency innovation in the United States. According to the CEO of Circle, the document “limits the speed of progress in both the blockchain industry and the financial technology industry.”
The STABLE bill is likely to be considered by the US Congress in its next session, which begins in January next year. Recall that in September, a bill appeared in the United States to regulate cryptocurrency exchanges.
