On December 2nd, a new bill was introduced in the US Congress and if this bill goes through, all stablecoins that are operating in the country will come under a blanket regulation. Any service provided in relation to these types of cryptocurrencies would be considered illegal if it doesn’t get the approval from different government bodies first. Referred to as ‘The Stable Act’, the bill is aimed at ensuring consumer protection from the numerous risks that are posed by emerging digital instruments. Some of the instruments that were cited as examples include Libra, the stablecoin project by Facebook, and several others.
However, it should also be noted that this 116th Congress will come to an end in a month, which means that odds are stacked against the bill getting approval on time. Rohan Grey, one of the assistant professors at Willamette Law, explained a few facts about the bill on Twitter. Private stablecoins are the primary target of the bill, which are issued by large tech companies, and it was worded in such a manner that it encompassed a number of monetary activities. Grey said that the ultimate aim of the bill is to reduce the risks of ‘Shadow-banking’ activities that had led to the global financial crisis in 2007 and 2008.
A Congresswoman for the Democratic Party, Rashida Tlaib, had been the lead instigator of this new bill. She said that the design of the Stable Act was to provide protection to the different minority groups who are unable to access regulated financial services in their everyday lives. This bill was not taken too kindly by the crypto community as a whole. CoinShares’ Chief Strategy Officer, Meltem Demirors said that the use of cryptocurrencies reduces the servicing costs for different populations, which have been associated with the banking sector for a long time.
According to Demirors, the introduction of the Act would only increase costs and compliance. In turn, this would reduce access to different minority groups that Tlaib had been talking about. The chief executive and co-founder of Circle, Jeremy Allaire also made a complete Twitter thread about this matter. He said that crypto innovation would be severely hampered because of this move within the United States and described it as a major setback. According to Allaire, this Act will only end up limiting the progress of both the blockchain and fintech industries.
A Wyoming House Representative, Tyler Lindholm said that the entire concept of decentralization on which the crypto industry depends would regard this Act as a move against it. The chief executive of ShapeShift, Erik Voorhees also shared his opinion about the matter. He said that the new Act was impossible, simply because cryptocurrencies couldn’t act as banks because of their very nature. This makes it apparent that people are not too keen over this new bill and with the change in Congress looming, there is a possibility that its approval may become a problem in the future.