Stablecoins will become known as “payments stablecoins” under the terms of a new regulatory bill the House Financial Services is planning to unveil next week.
According to multiple reports, bipartisan leaders on the committee have come to an agreement on the core terms of the bill, which foresees the dollar-pegged cryptocurrencies becoming a mainstream payments rail. As much as 95% of all stablecoin transactions are currently used in trading other cryptocurrencies at present, Securities and Exchange Commission (SEC) Chairman Gary Gensler said last week.
While sponsors of a larger bill creating a broad regulatory framework for cryptocurrencies conceded this week that it will have to wait until 2023, the urgency brought on by the $48 billion collapse of the Terra/LUNA stablecoin ecosystem in a week-long run in May seems to have led to wide agreement that a stablecoin framework can’t wait.
House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and ranking minority member Patrick McHenry, R-N.C., reportedly plan to formally markup the bill on Wednesday.
They plan to share details of the agreement with other committee members on Friday, so there’s certainly the potential for delays, with one Republican telling Bloomberg it’s “totally an open question” whether his party would support the bill agreed upon by the leadership.
Among the key aspects of the agreement is the unsurprising requirement that all stablecoins will have to be backed 100% by dollars or highly liquid, short-term Treasuries. They would be licensed and monitored by the Federal Reserve, Bloomberg reported. This would seem to ban the use of stablecoins that use arbitrage and other algorithm-based methods of defending a token’s dollar peg, but nothing is set in stone yet.
Another notable point is that regulators would have the power to mandate interoperability between stablecoins in order to prevent anti-competitive behavior, CoinDesk said.
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