A US House stablecoin bill is poised to go public, aiming to regulate digital tokens pegged to the value of steady assets and close the gap with the Senate’s version of the U.S. stablecoin oversight legislation.
The U.S. House of Representatives is on the cusp of unveiling a bill that would regulate stablecoins, with a key lawmaker indicating that the legislation will be debated in the near future.
Regulatory bodies worldwide are grappling with the challenges of stablecoin governance.
In the US, the Securities and Exchange Commission (SEC) has taken a keen interest in stables coins, viewing them as potential securities.
The SEC's stance is supported by a 2020 report from the Commodity Futures Trading Commission (CFTC), which highlighted regulatory gaps.
Meanwhile, the European Union is considering a comprehensive framework for stablecoin regulation.
As the use of stablecoins continues to grow, governments and regulators must strike a balance between innovation and oversight.
According to Rep. Bryan Steil, the Republican who leads the crypto subcommittee within the U.S. House Financial Services Committee, the bill aims to ‘close the gap’ with the Senate’s version of the U.S. stablecoin oversight legislation, which has already advanced through the Senate Banking Committee.
Stablecoins are a type of cryptocurrency designed to maintain a stable value relative to a fiat currency, such as the US dollar.
They achieve this through various methods, including pegging their value to a reserve asset or using complex algorithms to manage supply and demand.
Stablecoins are often used for trading, remittances, and hedging against market volatility.
Examples of popular stablecoins include Tether (USDT), USD Coin (USDC), and DAI.
These digital currencies offer a low-risk alternative to traditional assets while still providing the benefits of cryptocurrency.
The Current State of Stablecoin Regulation
Both bills would set up guardrails for the issuance of digital tokens that are pegged to the value of steady assets, such as the U.S. dollar. The major sticking point between the House and Senate versions is how the issuer would be regulated by states and federal agencies.
Stablecoins are digital currencies pegged to a fiat currency, such as the US dollar.
Oversight of stablecoins is crucial due to their potential impact on financial markets and their susceptibility to manipulation.
In 2022, the US Securities and Exchange Commission (SEC) began investigating several stablecoin issuers for potential securities law violations.
The SEC's oversight aims to ensure that stablecoins are transparently managed and do not pose a risk to investors.
Rep. Bryan Steil stated that the House stablecoin markup should happen ‘in the very near future,’ with lawmakers working to ‘close the gap’ with the Senate. He noted that the industry has already seen momentum on Capitol Hill, with big bipartisan support in efforts to erase an Internal Revenue Service rule targeting decentralized finance (DeFi).
A Shift in Politics and Regulation
Steil attributed the shift in politics and regulation to a more favorable political landscape. The House of Representatives is now considered ‘pro-crypto,’ with good working relationships between Republicans and Democrats, according to Steil.
He also outlined plans for another major crypto bill, which would regulate how digital assets markets function in the U.S. and govern transactions. This bill is significantly more complicated than the stablecoin legislation but is expected to move forward this Congress.
A Closer Look at the Speaker List
The speaker list at a recent event hosted by the Digital Chamber revealed the growing connection between the crypto industry and Congress. More than half a dozen U.S. senators were set to appear, as well as almost a dozen members of the House, including multiple Democrats.
This increased momentum on Capitol Hill is seen as a positive sign for the crypto sector, with big bipartisan support in efforts to regulate stablecoins and other digital assets.
