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    Home » Crypto News » US Lawmaker Unveils a Draft Bill Focused on Stablecoin Regulations

    US Lawmaker Unveils a Draft Bill Focused on Stablecoin Regulations

    Author: Dimitar Dzhondzhorov

    Last Updated Feb 15, 2022 @ 15:40

    Digital currencies should “qualify” as stablecoins only if they can be redeemed on a one-for-one basis for US dollars, Gottheimer argued.

    Josh Gottheimer – a member of the Democratic Party – revealed an early draft of legislation regarding stablecoins. Many critics claim that such financial assets undermine the monetary network and are often used by bad actors in criminal activities.

    Enhanced Rules for Stablecoins

    Over the last couple of years, some stablecoins such as Tether and USD Coin have become some of the largest digital assets by market capitalization, utilized by countless traders. Those two have a combined market cap of over $130 billion. The financial products are pegged to the US dollar’s value and are not volatile as bitcoin and the alternative coins.

    Despite that, it’s not all sunshine and roses, and they have their critics, with many regulators arguing they are employed in money-laundering operations or funding terrorism activities.

    Not long ago, American Senator Elizabeth Warren joined the bashing manifest suggesting that stablecoins pose risks to consumers and threaten the traditional financial system.

    Democratic lawmaker Josh Gottheimer is willing to put an end to that controversy. He proposed that certain digital currencies should “qualify” as stablecoins only if they can be redeemed on a one-for-one basis for US dollars.

    ADVERTISEMENT

    He said institutions issuing such products should be federally-backed banks or non-banks that agree to maintain 100% reserve assets consisting of American dollars or US debt. In his view, that would boost the development of the crypto industry:

    “I don’t think we should stifle innovation in the cryptocurrency market.”

    Gottheimer revealed that Nellie Liang (President Biden’s Under Secretary of the Treasury for Domestic Finance) had supported that plan.

    “We’ve been very engaged with Treasury and Blockchain Association and many of the businesses in the space,” the lawmaker said.

    Josh Gottheimer
    Josh Gottheimer, Source: CNBC

    Another proponent of Gottheimer’s proposal is Dante Disparte – Circle’s Chief Strategy Officer. He described the potential legislation as a “thoughtful, risk-based approach” that could “fit inside Federal regulatory frameworks.”

    “Supporting bank and non-bank innovations in the payment system is key to long-range competitiveness and broad optionality for how dollars move in the 21st century,” Disparte outlined.

    Stablecoins to Be Backed by Cash

    Not long ago, the bitcoin-loving Senator Cynthia Lummis also presented her opinion on the matter. According to her, stablecoins need to be cash-backed and regularly audited:

    “Stablecoins must be 100% backed by cash and cash equivalents, and this should be audited regularly. I am concerned that some stablecoins are not always fully backed by appropriate assets in a transparent manner.”

    On the other hand, the Republican acknowledged that such monetary products enable faster payments between people and businesses than hard dollars. She added that they promote financial inclusion and create new market opportunities.

    Featured Image Courtesy of NJ Spotlight News

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    You Might Also Like:

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      Crypto Industry Could Surge in 2022 on Stablecoin Regulations: Analysis
    • European Central Bank Building. Source: Fortune
      ECB Brings Crypto and Stablecoins Under Payments Regulatory Framework
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      Regulations Can Help Stabilize Stablecoins, Preventing a Possible Run, OCC Says
    Tags: Regulations Stablecoins United States
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    About The Author

    Dimitar Dzhondzhorov
    More posts by this author

    Dimitar got interested in cryptocurrencies back in 2018 amid the prolonged bear market. His biggest passion in the field is Bitcoin and he was fascinated with its journey. With a flair for producing high-quality content, he started covering the cryptocurrency space in late 2018. His hobby is football.

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