1 August 2026
US Crypto Law Would Temporarily Ban Terra Like Stablecoins
According to a new draft, the United States House of Representatives would place a two-year ban on new algorithmic stablecoins such as TerraClassicUSD (USTC), which de-pegged from the US dollar earlier this year causing widespread crypto market contagion.
The draft states that the creation or issuance of new “endogenously collateralized stablecoins” would be a criminal act.
Although, the legislation has given a grace period of two years for existing algorithmic stablecoin providers to change their models and collateralize their offering differently.
The definition would reportedly cover stablecoins which depend on the value of another virtual asset from the same creator to maintain its price and is marketed as having the ability to be converted, repurchased, or otherwise redeemed for a fixed price.
The bill is concerned over whether stablecoins such as Synthetix USD (SUSD) would be captured by the definition, as it is currently collateralized with the native asset of the same protocol in the SNX token.
It also mandates the U.S. Treasury to undertake a study on algorithmic stablecoins and consult with the Federal Reserve, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.
Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice
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