The Republican chair of the House Financial Services Committee has shared a new draft of a proposed law that aims to regulate stablecoins, a type of cryptocurrency tied to a stable asset like the U.S. dollar. This draft incorporates some ideas from Democratic lawmakers, indicating a possible bipartisan effort to regulate cryptocurrencies in the United States.
According to the draft, the Federal Reserve would be responsible for setting rules for issuing stablecoins, while state regulators would still oversee the companies that issue these tokens. The new draft is shorter and still a work in progress and will be discussed further at a committee hearing. The goal of this shorter draft is to combine the positions of both parties and includes input from Republican committee members.
The Fed would receive a few additional authorities following the new draft, such as the ability to intervene in emergency situations involving state-regulated issuers. States would also have the option to transfer their supervision responsibilities to the federal government.
The committee’s chairman, Rep. Patrick McHenry, has been working on stablecoin legislation as a priority for the past year. However, Democrats have criticized Republicans for making changes to the bill without their input and have released their own version. The previous version of the bill had bipartisan support due to its focused approach, but it is unclear how Democrats will react to the latest draft.
If the bill is introduced and approved by both the House and Senate, it would establish the first regulations for stablecoins in the United States. Stablecoins are widely used in cryptocurrency markets to trade between volatile cryptocurrencies and stable assets.
However, it’s worth noting that regulators in the US have expressed concerns and disapproved of stablecoins, as previously reported on Todayq. Earlier this year, the Securities and Exchange Commission (SEC) issued a Wells Notice to Paxos, the issuer of the third largest stablecoin called BUSD. The SEC alleged that Paxos sold an unregistered security. This example highlights the regulatory scrutiny surrounding stablecoins and the need for clearer guidelines in the industry.
The new draft removes a section that called for researching the idea of a digital dollar, which is a controversial concept. The Federal Reserve has not taken a definitive stance on whether a central bank digital currency (CBDC) is necessary for the United States.