The cryptocurrency approval landscape is coming to a head regulator inflection point.
And it may be stablecoins, the backbone of the cryptocurrency economy, that help chart a clear path forward.
This, as Republican lawmakers in the House Financial Services Committee unveiled its version of a new stablecoin bill on Monday (April 24), following a contentious debate April 19 about a major proposal.
The GOP document makes several changes, including giving state regulators more power to contract stablecoin issuers, something that New York Department of Financial Services (NYDFS) Superintendent Adrianne A. harris had been pushing for, and generally narrows the focus of, the bill, including the exclusion of algorithmic stablecoins.
Under the original bill, stablecoin issuers, which include both banks and non-banks, were required to register with the Federal Reserve even if they had received state approval. The latest iteration still allows the Fed to take final enforcement action against issuers if individual states fail to do so on its recommendation.
Importantly, the Republicans' bill includes a proposed confirmation that stablecoins are not securities and therefore should not be regulated by the National Stock Market Commission (SECOND).
Republican lawmakers have previously clashed with the SEC chairman Gary Gensler about its enforcement approach as a policy for the crypto sector and frequent claims that most of chips are values.
The SEC earlier this year sent a well notice to the issuer of the stablecoin paxosclaiming that his Binance-branded BUSD Stablecoin was an unrecorded security.
โThe SEC has forced digital asset market participants to regulatory frameworks that are not compatible with or applicable to the underlying technology,โ a group of Republican lawmakers wrote to Gensler.
โIt's the law; it's not a choice,โ Gensler has repeatedly said of the need for crypto companies to record with your agency.
The GOP's new stablecoin bill is scheduled to be debated on Thursday (April 27) as part of a congressional hearing sustained by the Subcommittee on Digital Assets, Financial Technology and Inclusion titled, "The Future of Digital Assets: Identifying the Regulatory Gaps in the Market Structure of Digital Assets."
Prove that Crypto has value beyond speculation
In recent weeks, questions about the status and regulation of digital assets and the market structure of the sector have become prominent around the world.
โregulatory clarity is really instrumental in creating the proper railings for you to [the industry] they can implement the right innovations around payments so they can thrive.โ gavin michaelCEO at crypto company Bakkthe told PYMNTS on April 17.
US policy is already catching up with Europe. EU legislators voted 517-38 on Friday (April 20) in favor of a cryptographic licenses structure, Markets in Crypto-Assets (MiCA), becoming one of the first jurisdictions in the world to introduce a comprehensive set of rules around crypto assets and their use.
โThis puts the EU at the forefront of the token economy," saying Stefan Berger, MEP leader for MiCA regulation, adding that the legal framework โbrings a competitive advantage for the EU. The European crypto-asset industry has a regulatory clarity that does not exist in countries like the US.
See also: Closing the cryptocurrency gap
MiCA offers a defined pathway to regulatory approval for crypto businesses, and the framework gives specific classifications to stablecoins based on the reserves they are backed by.
The new EU policy, which will take effect over the next two years, draws many of its rules and requirements from traditional finance, including capital requirements and transparency disclosure.
MiCA requires what it calls "significant" stablecoins, or those with 10 million users a year or more on average, to be overseen by the European Banking Authority. Those stablecoin issuers are also expected to hold a capital of at least 3% of the reserves. MiCA violations can cost up to 15% of annual revenue.
Many industry leaders have come out in support of the landmark legislation.
โWe are ready to make adjustments to our business over the next 12 to 18 months to be in a position of full compliance,โ chang peng zhaoCEO of the world's largest cryptocurrency exchange, Binancetweeted.
Binance has been faced for a long time regulatory investigations and problems in the US over concerns regarding the legality of your operations.
US cryptocurrency exchange coin base also tweeted that the passage of MiCA represented a "pivotal moment for crypto regulation.โ
Coinbase recently stepped up its infighting with the SEC, filing a legal challenge on Monday to have the SEC "propose and adopt rules to govern the regulation" of digital assets.
Reached by PYMNTS, the SEC declined to comment.
For all the crypto coverage of PYMNTS, subscribe to the daily crypto newsletter.
