The U.S. House Financial Services Committee has released a draft of a potentially groundbreaking stablecoin bill, which proposes a moratorium on stablecoins backed by other cryptocurrencies and calls for a study on a central bank digital currency (CBDC).
This bill is the first major cryptocurrency legislation to emerge in 2023 and comes in response to two significant events involving stablecoins over the past year.
The first event was the collapse of terraUSD (UST), which was supported by LUNA tokens, and the second event was the temporary detachment of USD Coin (USDC), the second-largest stablecoin, from its $1 peg. These events have raised concerns about the potential risks posed by stablecoins and the need for regulatory oversight.
The proposed bill includes the creation of definitions for payment stablecoin issuers, similar to a term used by former Senator Pat Toomey (R-Pa.) in his own stablecoin bill introduced in 2022. Additionally, the bill calls for a moratorium on stablecoins like UST until a study can be conducted on their potential impact, as well as a study on the potential impact of a CBDC issued by the Federal Reserve.
A House Financial Services subcommittee will hold a hearing on stablecoins on Wednesday, with witnesses including representatives from Circle Internet Financial, the Blockchain Association, Columbia University, and the New York Department of Financial Services. The hearing comes a day after the full Financial Services Committee meeting, where Securities and Exchange Commission Chair Gary Gensler is scheduled to testify.
The proposed bill has been circulating among lawmakers since last fall, according to a spokesperson for Rep. Patrick McHenry (R-N.C.), the chair of the committee. However, a spokesperson for Rep. Maxine Waters (D-Calif.), the ranking member of the committee, did not respond to a request for comment.
If passed, this stablecoin bill could have a significant impact on the cryptocurrency industry and how stablecoins are regulated in the U.S. It remains to be seen how lawmakers will respond to the proposed legislation and what changes, if any, will be made before it is enacted into law.
