US House Holds Public Hearing on Stablecoin Draft

starting from zero

The U.S. House of Representatives Financial Services Committee (FSC) held a public hearing on the legalization of stablecoins on the 19th and heard expert opinions from five witnesses. Prior to this hearing, the commission had released a draft of the stablecoin bill.

The draft, which was made public on Thursday, is the same as the bipartisan draft written last year by Democratic Rep. Maxine Waters (then FSC chairman) and Republican Rep. Patrick McHenry (current FSC chairman). It says.

Last year’s FSC effort to create a stablecoin bill was seen as the most promising move toward bill submission, as the Ministry of Finance was also involved and key points were agreed upon among the top members of the committee. rice field. However, it was not submitted in the end, and there was no substantive discussion between the two parties after that.

connection:US Stablecoin Bill May Be Delayed to Next Year

Waters said the draft was a joint effort, but negotiations were not complete over disagreements in the draft, including oversight responsibilities (states vs. federal). He said that “a lot of things happened” after drafting, including the bankruptcy of FTX, and that the draft does not represent a “finished product” but rather “starts from scratch when it comes to stablecoins.”

Democratic Rep. Stephen Lynch criticizes “whether we need a stablecoin” and calls the draft released by Republicans “outdated” that doesn’t reflect the lessons learned from the FTX collapse. bottom.

Republican Rep. French Hill, meanwhile, said both sides wanted the hearings to hear and discuss the experts. Chairman McHenry said the need for federal legislation on stablecoins is clear.

Need for legislation

Despite disagreements between the parties on the content of the draft, it is clear that there is a void at the federal level when it comes to cryptocurrency regulation, and Waters said that even if it means starting from scratch, I acknowledge the need to fill that void.

They also agreed bipartisanly that stablecoins are likely to fall outside the debate over the definition of “securities or commodities” and that they could evolve the U.S. payments system. .

Jake Chervinsky, Chief Policy Officer of the Blockchain Association, who testified, said the current US financial system is problematic.

He said that with the right policies, “stablecoins could revolutionize payment systems” amid growing concerns about the declining status of the US dollar as a reserve currency. He argued that it could “strengthen the US dollar’s dominance.”

About the draft

The draft includes the following points:

• Set the definition of “issuer of payment stablecoin”
• Issuer is a state or federally licensed business (bank or non-bank)
• Respond to customer redemption requests within 1 day
• Stablecoin issuance license applications are handled by state-level or federal-level regulators
• Regulators will have 45 days to verify required information from the applicant and 90 days to make a decision
• If the regulator does not make a decision, the application will be automatically approved
• Regulator Posts Application and Seeks Public Comment

Stablecoin issuers are required to “maintain a reserve that backs their payment stablecoin balance at least 1:1.” Valid reserves include U.S. coins and currencies, Treasury bills with maturity of 90 days or less, central bank reserves, Treasury bills with maturity of 90 days or less and maturity of 7 days or less. such as repo trading agreements.

If the issuing company does not obtain a license, it can be fined about 13.4 million yen ($100,000) per day.

There will be a two-year moratorium on cryptocurrency-backed stablecoins, during which time the Secretary of the Treasury, the Securities and Exchange Commission, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve will of stablecoins and submit a report within one year of passage of the bill.

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