The Stablecoin bill, first published and circulated on 17th April 2023, is currently up for more consideration by Congress, due to the partisan sentiment on cryptocurrency by opposing sides of the aisle.
The first version of the Bill led by Reps. Maxine Waters (D-Calif.) and Patrick McHenry (R-N.C.) first surfaced last year. The current version of the proposed Bill came to light only weeks after Rep. Waters had stated the lawmakers needed to draft the legislation from scratch to properly address the current macro environment for crypto.
While Republican House Members began to work on the draft of the Stablecoin Bill, they were met with an unwillingness to corroborate by their Democratic counterparts. Democratic House Members stated publicly that their voice was not being heard in the Republican draft of the Bill and have since moved for a new draft.
The Republican Members of the Committee’s draft bill proposed to give regulatory authority to the states with regard to stablecoins. This is similar to how crypto is regulated, giving the states the authority to define “money transmission” where crypto may or may not be a licensed activity. In contrast, the Democrats propose to give the Federal Reserve veto power in terms of the registration of issuers of digital assets. Despite both sides agreeing on the same definition of “payment stablecoins“, the Democrats are driven toward consumer protection and limiting the chances of non-bank stablecoin issuers exploiting the Federal Reserve programs. Currently, neither Bill has gone to Committee for a vote, however, another hearing on May 18, 2023, will be used to debate the details of the stablecoin legislation.
What are stablecoins:
Stablecoins are cryptocurrencies that have their market value pegged to a commodity such as gold or to a sovereign nation’s fiat currency such as the US dollar. Stablecoins aim at creating price stability by reducing the level of volatility in the market by pegging the value to a fixed amount of the underlying asset.
Since the value of the stablecoin usually runs a 1:1 ratio with the fiat currency or the commodity value they are pegged to, it is permissible to think of them as the tokenized form of a real-life monetary asset, with a fixed value.
The Bill is a major step toward comprehensive federal crypto legislation which many believe is the impetus for the creation of a Central Bank Digital Currency (CBDC).
Written By Anthonymark
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