A new bill providing a stable framework for currencies in the United States would see private issuers such as Circle, the issuer of USDC, and Tether Holding, the company behind USDT, placed under the supervision of the Federal Reserve (Fed).
The Federal Reserve Bank is the country’s central bank that directs monetary policy in the world’s top economy.
A bill on a stable framework in the United States
Bill published From the House Documents Repository, as discussed next week, April 19.
Stablecoins are crypto-tokens designed to track the price of a stable asset. Common stablecoins are those pegged to the US dollar, which is a reserve currency.
As of writing on April 16, Tether Holding’s USDT is the largest, with a market capitalization of $80.9 billion.
From the document, there is clarity as to exactly where stablecoin issuers are located. For example, the bill states that all non-bank institutions, that is, those that are “not a secured depository institution,” such as Circle, will be under the supervision of the Federal Reserve. That means they have to register, or fail to pay a $1 million fine, or its executives face five years in prison, or both.
The bill directs all dollar-pegged stablecoin issuers outside the United States to require registration before continuing operations in the country.
Meanwhile, under the bill, insured financial institutions seeking to issue stablecoins would be subject to the necessary federal banking agency supervision as stipulated in the Federal Deposit Insurance Act.
On April 19, policymakers will discuss the bill and look to approve some of its requests. The consideration will be the issuer’s technical ability and whether its proposal is inclusion-encouraging and innovative.
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In terms of reserves that support stablecoins, requests will include whether the applicant can hold US dollar reserves, Federal Reserve notes, short-term Treasuries, short-term repo agreements, or central bank deposits.
Regulators are cracking down on crypto companies
In recent months, the Securities and Exchange Commission (SEC) has been cracking down on stablecoin issuers and crypto companies.
In March, Binance CEO Changpeng Zhao said the regulator had sent a letter of notice to Wells to BUSD issuer Paxos. At the same time, New York authorities directed Paxos to stop issuing new coins.
The Securities and Exchange Commission too oppose Binance’s acquisition of Voyager.
Earlier, the New York Attorney General’s Office lawsuit KuCoin for failing to register the exchange.