The U.S. House of Representatives has published a new draft bill that presents a framework for regulating stablecoins.
The proposed law marked the first major crypto legislation in 2023.
- The draft suggests that insured depository institutions seeking to issue stablecoins are supervised by an appropriate federal banking agency.
- The legislation also proposes that the Federal Reserve (Fed), the U.S. central banking system, oversee non-bank issuers such as Tether and Circle.
- According to the document, those failing to register will be fined $1M and spend up to five years in prison.
- Stablecoin issuers outside of the U.S. will have to register with the appropriate regulator to operate in the country.
- The draft bill also bans issuing, creating, or originating stablecoins not backed by a tangible asset for two years, hinting at an upcoming study for the endogenous stablecoin by the U.S. Department of the Treasury.
- The document defines the endogenous stablecoin as a digital asset whose value is pegged to another digital asset created or maintained by the same issuer to sustain a fixed price.
- In the proposed legislation, the U.S. government is tasked with establishing standards for interoperability between stablecoins.
- A stablecoin is a type of cryptocurrency whose value is pegged to another reference asset, mostly a fiat currency.
- Stablecoins first showed up in 2014 with the release of BitUSD.
- Tether (USDT), USD Coin (USDC), and Binance USD (BUSD) are all among the popular stablecoins with higher market caps.
