A new bill providing a framework for stablecoins in the United States was published in the document repository of the House of Representatives, a few days before a audience on the subject on April 19. The draft puts the Federal Reserve in charge of issuers of non-bank stablecoins, such as crypto firms Tether and Circle, respectively issuers of Tether (USDT) and USD currency (USDC).
Stablecoins are a class of cryptocurrencies that attempt to offer investors price stability by being backed by specific assets or using algorithms to adjust their supply based on demand. Stablecoins were introduced in 2014 with the launch of BitUSD.
According to the document, insured depository institutions seeking to issue stablecoins would be under the supervision of the appropriate federal banking agency, while non-bank institutions would be subject to supervision by the Federal Reserve. Failure to register could result in up to five years in prison and a $1 million fine. Issuers outside the United States would have to apply for registration to do business in the country.
Factors for approval include the applicant's ability to maintain reserves backing the stablecoins with US dollars or Federal Reserve notes, Treasury bills with a maturity of 90 days or less, repurchase agreements with a maturity of 7 days, or less backed by Treasury bills maturing in 90 days or less, as well as central bank reserve deposits.
In addition, issuers must demonstrate technical expertise and established governance, as well as the benefits of offering financial inclusion and innovation through stablecoins.
In a Twitter thread, Circle CEO Jeremy Allaire saying that "there is clearly a need for deep bipartisan support for laws to ensure that digital dollars on the Internet are issued, supported, and operate securely." Cointelegraph reached out to Tether, but did not receive an immediate response.
Also, as part of the bill, a two-year ban on issuing, creating or originating stablecoins that are not backed by real assets is included. It also states that the Treasury Department would conduct a study on "endogenously guaranteed stablecoins."
Per the document's definition, endogenous stablecoins "rely solely on the value of another digital asset created or maintained by the same originator to maintain the fixed price."
The draft further allows the US government to set standards for interoperability between stablecoins. It also determines that Congress and the White House would support a study by the Federal Reserve on the issuance of a digital dollar.
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