Just-In: U.S. Congress Erupts In Heated Debate Over Stablecoin Regulation

stablecoin hearing

Following the conclusion of the riveting congressional hearing on April 18 that included SEC Chair Gary Gensler, the U.S. House of Financial Services Committee is holding a hearing on the regulation of stablecoins today. The hearing follows the unveiling of a new draft bill in the House to provide a legislative framework for stablecoins.

Congress Undecided On Stablecoin Bill

The U.S. Congress weighed its opinions on the new stablecoin bill, with few deeming it to be revolutionary while representatives like Stephen Lynch and Maxine Waters charged Rep. Hill — presiding as the Vice-Chairman of the House Financial Services Committee — and demanded further amendments to the proposed bill.

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The draft bill which intends to put a greater emphasis on stablecoins and stimulate research into the producing a digital dollar would obligate stablecoin issuers to hold reserves supporting their stablecoins on at least a one-to-one basis.

While speaking on stablecoin development and driving growth, Blockchain Association’s Chief Policy Officer, Jake Chervinsky, was quoted as saying:

Given the right policies, stablecoins can revolutionize the payment system & reinforce the dominance of the U.S. Dollar at a time when foreign adversaries like China are seeking to undermine its status as the global reserve currency.

Crypto Stalwarts Push Stablecoin Regulation

Austin Campbell who’s the current Managing Partner at Zero Knowledge Consulting emphasized that if the United States embraces the innovation of stablecoins, then with the rise of blockchains and crypto adoption, the reach of the dollar would also grow concurrently.

Additionally, he highlighted the fact that if the reserves for stablecoins, when appropriately regulated, “provide a pool of additional capital purchasing treasury debt or lending to the American financial system that did not previously exist”, thereby allowing stablecoins to draw in new foreign capital to fund the government.

The stablecoin draft bill is reported to place the Federal Reserve Board in control of stablecoin issuers that are not financial institutions. However, insured depository institutions and insured credit unions that desire to issue stablecoins would be overseen by appropriate federal banking regulators or the National Credit Union Administration. A fine of up to $1 million USD and up to five years in prison might be imposed on those who release stablecoins without the authorities’ consent.

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Pratik Bhuyan