US Congressman Calls for Insuring “Qualified Stablecoins”
In a press release from the Congressman himself, Josh Gotthiemer today released a discussion draft of the Stablecoin Innovation and Protection Act of 2022.
The act aims at ensuring clearer legislation on how stablecoins can be used to support the ongoing fintech innovation in the US.
One of the highlights of the legislation is on defining qualified stablecoins as well as creating qualified stablecoins out of volatile cryptocurrencies. Along with this Gottheimer’s discussion draft also intends on placing protections in place for consumers.
Regarding the legislation Gotthiemer stated:
“The expansion of cryptocurrency offers tremendous potential value for our economy. But for cryptocurrency to grow and thrive here in the United States, instead of overseas, we must provide more direction and certainty to the marketplace to help boost innovation and protect consumers”
As per the legislation cryptocurrencies that can be redeemed on demand on a one-to-one basis for USD would be considered qualified stablecoins which wouldn’t be classified either as a security or a commodity.
Such stablecoins would only be issued by either an ‘insured depository institution’ i.e. a bank or else a non-bank qualified stablecoin issuer.
In the case of the former being the stablecoin issuer, the legislation proposed to establish a Qualified Stablecoin Insurance Fund within the Federal Deposit Insurance Corporation (FDIC).
This would be in addition to the primary oversight by the Office of the Comptroller of the Currency (OCC) which is by default applicable to either of the issuers.
Additionally, the legislation also laid down provisions for stablecoin issuers stating that the issuer must maintain at least 100% reserve assets. Furthermore, cash collateral must be held in a separate FDIC insured account.
The US on Cryptocurrencies
With discussions continuing to determine the state of cryptocurrencies in the country, currently, no regulation, in particular, has been established for said digital assets.
Regardless SEC is continuing to track down crypto criminals and defrauders as well as those who haven’t been adhering to pre-established laws.
The most recent case of the same was with BlockFi when the Securities and Exchange Commission issued a $100 million fine for not compiling with the Investment Company Act of 1940.
With this not only did SEC penalize the dApp with the biggest fine in history but also set a precedent for crypto affiliated businesses that fail to comply with the laws.