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A bill on stablecoins was just submitted to the US government yesterday. According to the bill, companies that want to issue stablecoins must have “abundant” collateral.
In recent years, US officials have increasingly shown interest in cryptocurrencies when they want to bring crypto into the legal framework. Present, “Responsible Financial Advancement Act” drafted by Senators Cynthia Lummis and Kirsten Gillibrand is the most notable proposal.
However, the scope outlined in this draft is still too broad, involving many departments, including many legal entities. Analysts concede that legalizing such a regulatory framework could take up to a decade, as it goes through multiple procedures. As a result, many other officials were also involved in proposing other related bills.
Most recently, House Speaker Maxine Waters and Republican Patrick McHenry submitted a bill that specifically focuses on stablecoins.
Although not officially public, but according to some inside sources, the new draft requires stablecoins to be backed by assets such as cash or US Treasury bills. The reason is that they are not subject to strong fluctuations before the ups and downs of the market.
Accordingly, companies intending to issue stablecoins in the US must demonstrate their capital reserves, high liquidity and cooperate with the supervisory authority.
If this source is accurate, it is likely that the new draft will be “green lighted” by the House of Representatives. An even bigger hurdle, however, is the Senate, which is said to be stricter on proposals coming from the House. To pass by both houses, the bill needs to be bipartisan and universal so that officials in both houses are less likely to oppose it.
Ultimately, in the event of passage of the House of Representatives, it will become the first major digital currency legislation in the US, opening the door to wider crypto adoption and access. Although it is inevitable that stablecoin companies must comply with some strict regulations if they want to operate in the country.
Worth mentioning, if this regulation is applied, commercial companies will be banned from issuing stablecoins. Names that are “watching” the market like Meta (Facebook’s parent company), Amazon nice Walmart are not allowed to issue their own stablecoins.
The US government’s concerns are well-founded, especially given what has happened in both traditional and crypto financial markets lately. After the collapse of LUNA – UST, this is a strong action by the US government to study to pass stablecoin law this year.
Amid the stricter regulatory situation, Tether, the world’s largest issuer of USDT stablecoins, said it would reduce its share of commercial paper holdings and conduct an audit with an industry leader to demonstrate its capabilities. Liquidity. Circle, the issuer of USDC, also just released its USDC escrow report.
The draft is expected to be discussed at a meeting on July 27.
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