US Lawmakers Planning To Mandate Stablecoins To Get Federal Approval

The US Congress had seen a new bill introduced on Wednesday night. Should this bill be passed, a blanket regulation on all stablecoins operating in the country could be reinforced. Any service that is provided regarding these types of cryptocurrencies will be deemed illegal if they have not gained approval by multiple government bodies, first.

The Stable Act Tries To Regulate Crypto

The bill itself is called “The Stable Act.” The bill itself’s intent is to ensure consumer protection from the various risks that emerging digital instruments pose to them. Examples of these instruments were given by way of Libra, citing other stablecoins as well. It should be noted, however, that the 116th Congress is just a month away from ending, meaning the bill itself has the odds stacked against it to be approved on time.

Willamette Law had one of its Assistant Professors, Rohan Grey, explain via Twitter a few facts about this bill. The bill itself is aimed largely at private stablecoins that large tech companies issue out, and was worded in a way to include an array of monetary activities.

I'm thrilled to share the announcement of @RashidaTlaib's new "Stablecoin Tethering & Bank Licensing Enforcement (STABLE) Act", (#STABLEAct) cosponsored by @ChuyForCongress & Chair of the House Financial Services Committee's Fintech Task Force, @RepLynch.https://t.co/3akI6QPLbd

— Rohan Grey (@rohangrey) December 2, 2020

Grey stated that the bill is ultimately aiming to stop risks of “Shadow-banking” activities, which led to the global financial crisis back in 20017 and 2008.

Rashida Tlaib stands as a Congresswomen for the Democratic Party, and was the lead instigator of this bill. She explained that the Stable Act’s design was to protect various minority groups that don’t have access to a regulated financial service in their day-to-day lives.

Preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of color traditional big banks have is critically important. That's why I'm proud to introduce the #STABLEAct with @RepChuyGarcia and @RepStephenLynch. https://t.co/yorQPo6wz4

— Congresswoman Rashida Tlaib (@RepRashida) December 2, 2020

The Many Voices Against It

The crypto community at large didn’t take to this bill too kindly. Meltem Demirors, the Chief Strategy Officer of CoinShares, explained that crypto at large lower the servicing costs to various populations that had been excluded historically within the banking sector.

Demirors stated that the Act’s introduction would only increase the compliance and costs. This, in turn, would cut access to various minority groups that Tlaib was advocating to protect through it.

Big Crypto Figures Unimpressed With Act

Jeremy Allaire stands as the co-founder and CEO of Circle, and gave an eight-post Twitter thread about the matter. He stated that this move would severely hamper crypto innovation within the US, describing it as a huge step back. In Allaire’s opinion, all this Act will do is limit the progress of both the fintech and blockchain industries.

Tyler Lindholm, a Wyoming House Representative, states that the entire ethos of decentralization, which the crypto space is built upon, would see this Act go against it.

Even Erik Voorhees, the CEO of ShapeShift, gave his opinion about the matter. He declared the Act as impossible, simply due to cryptocurrencies being unable to act as banks due to their very nature. All in all, it seems that not a lot of people are keen on this new Act.