• The House Financial Services Committee has unveiled its long-awaited stablecoin legislation
• It includes customer protection rules, risk management, and capital requirements
• Companies seeking to issue stablecoins must apply with the appropriate regulator, which will have 45 days to acknowledge receipt of the application and 90 days to decide
Licensing Requirements & Fines
The proposed bill requires payment stablecoin issuers to maintain reserves that back their coins on a one-to-one basis with various assets. Companies seeking to issue stablecoins must apply with the appropriate regulator. Failure by the regulator to make a decision within the allotted timeframe will result in automatic approval, followed by public comment on the application. Additionally, failure to obtain the required license could result in substantial fines of up to $100,000 per day for stablecoin issuers.
The proposed bill also includes a temporary ban on algorithmic stablecoins. Algorithmic stablecoins are those backed by other digital assets or use alternative mechanisms to maintain their value. This moratorium would last two years while research is conducted into such coins‘ potential impact.
A spokesperson for Tether expressed optimism that regulation would bring clarity for larger corporates, institutions, and fintech companies entering the crypto market; however Tether’s current practices do not align with these regulations.
Central Bank Digital Currency Study
The bill also incorporates a provision for studying the potential impact of a central bank digital currency (CBDC). This study aims to explore how existing laws and regulations can be adapted or amended to accommodate CBDCs and assess any risks related thereto .