New Congressional bill includes mandate for stablecoin issuers to obtain U.S. banking charters
Three House Democrats have unveiled a new piece of legislation focused on the regulation of stablecoins issuers and companies that provide stablecoin-related services.
The draft bill, if approved, “would protect consumers from the risks posed by emerging digital payment instruments, such as Facebook’s Libra and other Stablecoins currently offered in the market, by regulating their issuance and related commercial activities,” according to a statement published by the office of Rep. Rashida Tlaib.
The bill would notably mandate that “any prospective issuer of a stablecoin to obtain a banking charter” and “that any company offering stablecoin services must follow the appropriate banking regulations under the existing regulatory jurisdictions.” The legislation was put forward by Tlaib along with Reps. Stephen Lynch and Jesús García — all of whom signed a letter that took aim at U.S. Comptroller Brian Brooks for his focus on cryptocurrency-related issues earlier this month.
According to the text of the bill, the draftees appear to be casting a wide regulatory net to cover those that issue stablecoins or provide business services related to them.
As the text states:
“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.”
“From the OCC to the Federal Reserve to those peddling stablecoins, the protections the STABLE Act would make possible are more needed than ever amid a pandemic that will breed riskier financial decisions out of necessity because our federal government continues to fail us all by not providing adequate relief legislation. I thank Congressman García and Chairman Lynch for co-leading this important effort to see these protections made a reality,” Tlaib said in a statement.
“We cannot outsource the issuance of American currency to private entities and the STABLE Act guarantees that our regulators will be able to effectively oversee the application of this new technology,” Lynch said in a statement.
The draft bill can be found below:
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Author: Michael McSweeney