7 October 2022
New Bill Makes It Illegal To Issue Stablecoins Without Federal Approval
The US Congress introduced a new bill on Wednesday that can put regulations over stablecoins. If the bill gets passed, it would be mandatory to take federal approval to carry out stablecoins activities and one who fails to do so will be considered illegal.
"It shall be unlawful for any person to issue a stablecoin or stablecoin-related product, to provide any stablecoin-related service, or otherwise engage in any stablecoin-related commercial activity, including activity involving stablecoins issued by other persons, without obtaining written approval in advance, and on an ongoing basis, from the appropriate Federal banking agency, the Corporation, and the Board of Governors of the Federal Reserve System."
The bill is termed as, “The Stable Act,” and it aims to “protect consumers from the risks posed by emerging digital payment instruments, such as Facebook’s Libra and other Stablecoins.”
Rohan Grey the Assistant Professor at Willamette stated on Twitter that though the bill wants to make the issue of stable tokens private by large tech companies, it was worded in such a way as to include a “wide range of monetary activities. He also added that the bill seeks “to prevent the kind of systematic ‘shadow-banking’ risks that led to the global financial crisis of 2007-2008.”
Rashida Tlaib, the Democratic Party congresswoman also the lead instigator of the bill, said that the Stable Act is brought to protect people of minority groups and color who lack access to regulated financial services.
The crypto community has given disapproval over the bill. Meltem Demirors, the chief strategy officer of CoinShares responded that “cryptocurrencies lower the cost of servicing the populations that have historically been excluded from the banking sector.”
In the thread of tweets, the CEO of Circle and co-founder Jeremy Allaire claimed that the act “would represent a huge step backward for digital currency innovation in the United States, limiting the accelerating progress of both the blockchain and fintech industry.”