Revolutionizing Currency: Congress' New Stablecoin Bill

Revolutionizing Currency: Congress' New Stablecoin Bill

written by John Murphy | April 16, 2023

According to recent news, A fine of $1 million and a prison of up to five years is expected if you fail to register as a stablecoin issuer. It is necessary to operate in the country to register except for U.S. issuers.

Key Takeaways:

  • Stablecoin issuers outside the US must register or face a $1 million fine and up to five years in prison.
  • A new Stablecoin Bill in the US Congress aims to provide stablecoin infrastructure and put non-bank issuers under Federal Reserve supervision.
  • Stablecoins are a cryptocurrency class that provides price stability through algorithms and specific assets.
  • Approval of stablecoin issuance will depend on factors such as reserves, technical expertise, and governance.
  • The US government may develop stablecoin interoperability standards and support digital dollar issuance study by the Federal Reserve.

Boncryp announced on Twitter that if stablecoin issuers cannot register, they punish with $1 million and five years in jail. All issuers except the U.S. need this registration for the operation in the country.

A few days before the hearing on 19 April, the House of Representatives document repository published a new draft bill. This bill provides a stable coin infrastructure in the U.S. In charge of the non-bank stable coin, this draft puts the Federal Reserve, such as cryptocurrency companies like Circle and Tether.

Evai Crypto Ratings announced on Twitter that in the United States, a new draft bill provides stablecoin’s framework and is published in the House of Representatives document repository before a hearing on 19 April.

What is a stablecoin? A class of cryptocurrency that provide price stability to investors. Algorithms and specific assets adjust the supply-based demand of investors. In 2014 with the release of BitUSD, Stablecoin was introduced.

A document states that non-bank institutions fall under the supervision of the Federal Reserve while the Federal banking agency supervises the insured depository institutions.

Bush.NFT took to Twitter to announce that the united states congress introduced the new draft bill for stablecoin issuers outside the country.

Let’s see the factor for the approval of the bill. Central bank reserves, the ability of the applicant to maintain reserve backing the stablecoins with United State dollars, treasury bills backed with the maturity of 70 or 90 days of the repurchasing agreement, Federal Reserve’s notes, and treasury bills with 90 days or less maturity are the important factors.

Additionally, the issuer must demonstrate the financial innovation and inclusion offering’s benefits via stablecoins, technical expertise, and developed governance.

The CEO of Circle named, Jeremy Allaire, stated on Twitter Thread that there is a need for bi-partisan and deep law support to ensure the safe issuance of digital dollars on the internet.

The creation and issuance of stablecoin without backing real assets results in drafted legislation of ban of 2 years. It also highlights that the Treasury Department studied “endogenously collateralized stablecoins”.

According to the definition of the document, maintaining the fixed price stable coins relies on the maintenance and creation of digital assets by the same originator.

Furthermore, this document allows the government of the United States to develop interoperability standards between stablecoins. Additionally, it determines the support of the White House and Congressoofthe study of Federal Reserves regarding digital dollar issuance.