U.S. Senator Bill Hagerty has released a draft bill that would provide clear regulations for the use and operation of stablecoins. This bill reflects the same content and objectives as the Payment Clarity Stablecoin Act of 2023, with several amendments.
Hagerty bill proposes dual regulatory oversight for stablecoin issuers
In July 2023, Republican Sen. Patrick McHenry introduced the “Payments Clarity Stablecoins Act of 2023,” which aims to provide the necessary recognition, oversight, and regulation for stablecoins in the United States. . The bill was passed by the U.S. House Financial Services Committee seven days after it was introduced, and then placed on the Coalition Calendar for debate and vote in the U.S. House of Representatives.
In order to maintain the vision of establishing stablecoin regulation in the United States, fellow Republican Senator Hagerty released a discussion draft on the “Payment Clarity Stablecoin Act of 2024,” which Senator McHenry This was enacted in response to the current administration’s intention to step down at the end of its term.
This is because all pending bills that were not passed at the end of the term must be sorted out and resubmitted to the new Congress for approval. Sen. Hagerty’s discussion draft builds on Sen. McHenry’s bill, which introduces two important additions.
First, the draft proposal states that only stablecoin issuers of tokens with a market capitalization above $10 billion will be supervised by federal regulators, while stablecoin operators below specified thresholds will be supervised by state regulators. is proposed. Additionally, Senator Hagerty advises that the Federal Reserve act as a regulator of depository financial institutions, while the Office of the Comptroller of the Currency oversees the operations of federally chartered nonbank issuers.
Commenting on the proposed bill, Republicans have praised the positive potential of stablecoins in the United States. Senator Hagerty says:
For too long, these benefits and widespread promise of stablecoins have been hampered by a lack of clear regulation. My bill provides much-needed clarity and puts in place the legal framework necessary to realize the full potential of this technology for the benefit of the American people.
For context, the discussion draft represents an early version of the bill that will be circulated for feedback from industry participants, legislators, and experts. This is different from the bill formally submitted to Congress.
Do I need to be careful about the Stablecoin Transparency Act?
The Stablecoin Payments Transparency Act is part of the first set of bills aimed at bringing administrative approval to stablecoins and cryptocurrencies in general. Although this is a welcome development, some members of the crypto community have expressed concerns about the content of the bill and its impact.
In an X post on Friday, Ethereum community member Ryan Berkmans highlighted some of these concerns. First, Sen. Hagerty’s bill prohibits the use of unlicensed stablecoins, which likely include decentralized tokens such as DAI.
Additionally, foreign companies such as Tether will be required to obtain a license to issue stablecoins to U.S. citizens. Additionally, authorized stablecoin reserves are limited to short-term government bonds, excluding options such as US dollars, demand deposits, or gold. Berkmans believes these and other rules will not only stifle innovation in the stablecoin industry, but will also result in significant market fragmentation.
Cryptocurrency market capitalization is equivalent to $2,133 billion on daily chart | Source: Tradingview.com TOTAL chart
As of this writing, stablecoins have a total value of $165.66 billion, accounting for 7.59% of the cryptocurrency market. Tether (USDT) remains the dominant stablecoin with a market capitalization of $119.69 billion.
Featured image from StormGain, chart from Tradingview
