A new bill on stablecoins was officially announced over the weekend, and this new legislation will be the most important topic to be discussed at a meeting in the coming days. US lawmakers will hold several hearings this week that are likely to decide the future of stablecoins. The meeting will be attended by big names such as Dante Disparte of the cryptocurrency company and issuer of stablecoin USDC, Dante Disparte, Head of the New York Department of Financial Services. Here are the details…
Important speeches will be made for cryptocurrencies
The House of Representatives Financial Services Committee will meet for a session on the stablecoin issue on Wednesday, April 19, and has also released draft legislation for a stablecoin bill that could impose a moratorium on cryptocurrency. The text of the bill states, “For a period of 2 years from the date of enactment of this law, it will be illegal to issue, create or create a collateralized stablecoin that does not exist at the time of entry into force of this law.”
The moratorium on stablecoins will last until the government completes a study on the issue. The legislation also calls for a study that examines the impact of a Fed-issued central bank digital currency (CBDC). Last year, Representative Patrick McHenry, who currently chairs the committee, said he wanted to focus on stablecoins if Republicans recaptured the House. Also, the proposed moratorium follows the law introduced last year by former Senator Pat Toomey, Republican of Pennsylvania, which bans algorithmic stablecoins.
Witnesses at Wednesday’s session will include Dante Disparte, chief strategy officer at Circle Internet Financial, which issues the USDC stablecoin, and Austin Campbell, a Columbia University business professor. Also testifying will be New York State Department of Financial Services inspector Adrienne Harris and Blockchain Association policy chief Jake Chervinsky. Behind this hearing is the question of whether the arrival of the new FedNow payment system will make cryptocurrencies and stablecoins obsolete.
Disparte questionable about USDC de-peg
The most important aspect of the bill is that stablecoins must be backed by at least 1-to-1 reserves. These reserves can consist of US dollars, Treasury bills, central bank deposits, and insurance funds that protect deposits. The bill designates the Fed as the agency responsible for regulating stablecoin issuers that do not hold a banking license. Those who issue stablecoins without regulatory approval can face fines of up to $1 million and up to 5 years in prison.
Another issue addressed in the draft law was stablecoins backed by other crypto assets. Circle executive Disparte is likely to be questioned about the USDC’s “losing the $1 peg” last month during the bill’s deliberation. cryptocoin.com As we have also reported, USDC’s balance fell to $0.83 due to the effects of the banking crisis.
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