Negotiations between two top congressional leaders to draft a stablecoin regulation bill that could win passage this year have hit another roadblock.
While it is widely agreed that the need for stablecoin regulation is more pressing than cryptocurrencies as a whole, the top two members of the House Financial Services Committee have been unable to reach agreement on the bill they are negotiating. do not have.
Unless the movement resumes in the next few weeks, it seems unlikely that the bill will pass this year. Complicated legislation that requires bipartisanship and compromises on both sides would be highly undesirable, especially as the highly contested midterm election cycle is about to hit full swing. Not to mention the fact that even if the committee and the House reach agreement, a similar bill would have to be introduced and taken up in the Senate.
read more: A Primer on US Stablecoin Regulation
This has stalled in many ways, notably the ability of state-chartered banks and other institutions to issue and oversee stablecoins, CoinDesk reportWhile it is widely agreed that stablecoins must be 100% backed by highly liquid investments such as dollars and short-term Treasury bills, only federally regulated and FDIC-covered banks will do so. The government’s position that the aisle.
Opinions are also divided on how these backing reserves should be treated (eg, whether banks can use them for lending just like other deposits).
Additionally, the bill may require further research on Central Bank Digital Currencies (CBDCs) (digital dollars), which also poses a problem.
Both current and former regulators of the currency have embarked on regulation of cryptocurrencies this week.
Pointing to a string of bankruptcies resulting from the $48 billion collapse of the Terra/Luna stablecoin, Michael Su, the firm’s current resident, said, “The impact is still being felt in the crypto space today. there are,” he said.
Suu speaking at The Clearing House + Bank Policy Institute Annual Conference on Wednesday (September 7) Said “By contrast, the federally regulated banking system has been largely unaffected. I think it comes down to approach.”
Speaking more broadly about the digitization of banking, Su said the impact of cryptocurrencies has been overstated.
The change is “through the expansion of tech companies into financial services and, to a lesser extent, the hype and growth of the crypto industry,” he said. “Cryptocurrencies have been making headlines for much of the past year, but I believe FinTechs and Big Tech are making a big impact and will grab our attention even more.”
During a panel discussion at the same event on Tuesday (September 6), Clinton-era currency supervisor Eugene Ludwig said cryptocurrency and fintech companies competing with banks were “getting away with murder,” he said. Bloomberg said. reportLudwig said there wasn’t enough oversight for those firms that take deposits or make loans, adding that they could set off the next recession.
Ludwig, now managing partner of Canapi Ventures, added that banks should be allowed to “play more aggressively in the cryptocurrency market” to regain their turf.
California is like New York
California “put a page in the New York playbook with a bill that would introduce the same type of onerous licensing and reporting regimes that have stifled the growth of the crypto industry and restricted access to safe and trusted crypto products and services. It is on the verge of coming out, the Blockchain Association said, referring to BitLicense from the New York Department of Financial Services.
Democrat Timothy Grayson, the bill’s author, called it a “smart and balanced policy” and said that “a healthy cryptocurrency market can only exist if simple guardrails are established.” added.
The bill, which is awaiting the governor’s signature, would allow, among other things, stablecoins issued by both federally or state-sanctioned banks and other trust companies.
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