Although its full impact and consequences are yet to be determined; a recent draft of a U.S. House bill proposes a two-year ban on stablecoins like Terra’s UST stablecoin.
The Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the SEC are just a few of the federal financial institutions that would be required to do a study on tokens similar to stablecoins under the House legislation, which targets them.
Before being presented to the House, the bill’s final version is still being developed under the leadership of Maxine Waters and Patrick McHenry, two House members. A complete ban does not appear to be in the cards for this legislation, while it is rumored that the measure will also let banks (and others) create stablecoins. Standard federal regulators would need to approve stablecoin issuers, and a formal framework would be set up for non-bank businesses that desire to issue stablecoins.
As early as the end of this month, the law might be put up for a vote.
Despite difficulties for significant USDC stablecoin concerns like Circle, there is still significant growth occurring as demonstrated by Circle’s USDC market cap dominance. Source: TradingView.com’s USDC Market Cap Dominance
State of Stablecoins
There is a lengthy relationship between crypto skeptics and stablecoins, including heritage stablecoin Tether, despite the fact that Terra’s demise is frequently cited as the reason for stablecoin criticism. While skeptics’ attention had previously been focused on Tether’s reserve assets in recent years, Terra’s collapse and the enormous sums of money lost as a result have given American legislators greater “pep in their step” to confront stablecoin laws.
Even so, stablecoin issuers like Circle, who want to develop ties and lobby current legislators, and even exchanges like Coinbase, believe that sound regulation can promote growth. The majority of American-based businesses would prefer to follow a clear set of rules and regulations than stress over getting caught in an ill-defined “grey area.” We’ll wait and see how it turns out.
