U.S. House Legislation Looks To Place Two-Year Ban On UST-Like Stablecoins
September 21 2022 - 11:59AM
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Are stablecoins in the sights of U.S. regulators? The decline of
Terra Luna and it’s UST (and correlating LUNA) token earlier this
year brought along plenty of fanfare. It’s full damage and
implications, however, have clearly yet to be established; a new
draft of a U.S. House bill is proposing a two-year ban on
stablecoins similar to Terra’s UST stablecoin. UST depegged and
caused major ripples throughout defi earlier this year. Let’s look
at what the legislation could potentially bring to the market.
Stablecoins Under Scrutiny? According to a report from Bloomberg,
the House bill takes aim at stablecoins and would “mandate a study
on Terra-like tokens from Treasury” along with a bevy of federal
financial bodies, including the Federal Reserve, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corp.,
and the SEC. The final version of the bill has not been proposed
and the bill, led by House members Maxine Waters and Patrick
McHenry, is still working through draft iterations before it’s
presentation to the House. However, it’s reported that the bill
will also allow banks (and others) to issue stablecoins – so an
outright ban does not seem to be in the cards for this legislation.
Stablecoin issuers would need to seek approval from standard
federal regulators, and a formalized process for non-bank entities
that want to issue a stablecoin would be established. The bill
could be presented to vote on as early as the end of this month.
Despite challenges for major stablecoin issues, like Circle and
their USDC stablecoin, there is still substantial growth taking
place - as exhibited by Circle's USDC market cap dominance. |
Source: USDC Market Cap Dominance on TradingView.com Related
Reading: Robinhood Lists USDC, It’s First Stablecoin State Of
Stablecoins While Terra’s downfall is often stated as the driver
behind stablecoin scrutiny (and rightfully so), there is a
long-standing history between crypto critics and stablecoins –
including legacy stablecoin Tether (USDT). As we’ve covered in
recent months, while critic’s eyes were already honing in on
Tether’s reserve assets in recent years, Terra’s crumbling and the
billions of dollars lost with it have given U.S. legislators extra
‘pep in their step’ in addressing crypto regulations around
stablecoins. Nonetheless, healthy regulation can spur growth – and
that’s been the core of the argument for stablecoin issuers like
Circle, who look to build relationships and lobby with current
legislators, and even exchanges like Coinbase. Most U.S.-based
firms would rather have a clear set of rules and guidelines to
follow than worry about getting stuck in a loosely-defined ‘grey
area.’ We’ll see how it shakes out. Related Reading: Optimism
Analysis: Latest Figures Could Induce Investor Trust Featured image
from Pixabay, Charts from TradingView.com The writer of this
content is not associated or affiliated with any of the parties
mentioned in this article. This is not financial advice. This op-ed
represents the views of the author, and may not necessarily reflect
the views of Bitcoinist. Bitcoinist is an advocate of creative and
financial freedom alike.
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