The US government is developing a bill to regulate stablecoins
U.S. Treasury Secretary Janet Yellen told Congress that regulatory gaps in digital assets, some of which could pose risks to investors or the financial system, must be quickly addressed.
At a Feb. 6 hearing on the Financial Stability Oversight Council's annual report, the Treasury Secretary called the regulation "critical" for certain areas, including protecting crypto wallet holders and supervision of stablecoin issuers. It was also stated that both major parties are “very close“ to agree on such a law.
Circle CEO Jeremy Allaire recently expressed optimism on the fact that the US will pass much-needed stablecoin laws in 2024. Note that Circle is the company behind the stablecoin USD Coin
At a Feb. 6 hearing on the Financial Stability Oversight Council's annual report, the Treasury Secretary called the regulation "critical" for certain areas, including protecting crypto wallet holders and supervision of stablecoin issuers. It was also stated that both major parties are “very close“ to agree on such a law.
Circle CEO Jeremy Allaire recently expressed optimism on the fact that the US will pass much-needed stablecoin laws in 2024. Note that Circle is the company behind the stablecoin USD Coin
USDC capitalization growth over the past year. Source: Coinmarketcap
Where it all began
Let us recall that back in 2021, the US presidential administration published a report that spoke of the urgent need for a bill to regulate stablecoins. This report specifically addressed the importance of limiting the issuance of stablecoins to only those issuers that were insured. In essence, such a law would allow regulators to control this industry as strictly as the banking industry.
A stablecoin is a type of cryptocurrency whose value is tied to a fiat currency (that is, regular currency, such as the dollar or euro) or a physical asset (such as gold). In theory, a stablecoin can be bought or sold at a fixed price at any time. When the coin is exchanged for fiat money, the stablecoin is usually “burned” and goes out of circulation.я.
The administration noted that to compile its analysis, it consulted with key participants in the cryptocurrency industry: payment systems Mastercard, Visa and Square, as well as crypto exchanges Coinbase, Kraken and Gemini.
Over the years since then, stables, like USDT, USDC, etc., have “broken the bank”, increasing their capitalization many times over. Unlike their volatile crypto counterparts, stablecoins are mainly valued for their stability (for good reason they have that name).
Over the years since then, stables, like USDT, USDC, etc., have “broken the bank”, increasing their capitalization many times over. Unlike their volatile crypto counterparts, stablecoins are mainly valued for their stability (for good reason they have that name).
USDC capitalization growth over the past year. Source: Coinmarketcap
The US Treasury Department, then and now, was wary of the spread of stablecoins as a means of payment. It stated this in its report. The main concerns concerned the possibility of uncontrolled release of assets, possible technical failures of such a payment system and the centralization of economic power among issuers. To resolve these problems, the sponsors proposed that lawmakers “immediately” pass legislation that would make it possible to regulate stablecoin issuers as strictly as banks. Now this law can be expected this year.
The position of politicians is that such a move would give banking regulators control over the industry and allow some form of government support to be provided in case of crisis situations. The report noted that classifying stablecoin issuers as banks would expand the powers of US government agencies.
The report also stated that the US Securities and Exchange Commission (SEC) has the authority to regulate stablecoins as securities or derivatives, respectively. The head of the SEC, Gary Gensler, noted that the agency intends to ensure full compliance with the relevant laws for stablecoins until Congress takes legislative action.
By the way, in the same year, Gary Gensler compared stablecoins to poker chips.
The report also stated that the US Securities and Exchange Commission (SEC) has the authority to regulate stablecoins as securities or derivatives, respectively. The head of the SEC, Gary Gensler, noted that the agency intends to ensure full compliance with the relevant laws for stablecoins until Congress takes legislative action.
By the way, in the same year, Gary Gensler compared stablecoins to poker chips.
SEC Chairman Gary Gensler
Opinion of the AML Crypto team
We at AML Crypto constantly monitor the issue of regulation in the world of cryptocurrencies. As we see, this area affects many aspects that we deal with, such as AML blocking, checking the origin of cryptocurrency, checking cryptocurrency for purity, crypto analytics, etc.
The US government's current desire to control stablecoins as well as the banking sector is not unusual. It is likely that this bill will see the light of day soon.
On the one hand, this is an additional attempt to influence the blockchain world and an attack on its independence and decentralization. On the other hand, this is an opportunity to protect the rights of citizens who use cryptocurrencies.
One thing is certain - you can check a USDT wallet or check a BTC wallet equally simply and quickly in our solution Btrace - free AML check for each new user.
The US government's current desire to control stablecoins as well as the banking sector is not unusual. It is likely that this bill will see the light of day soon.
On the one hand, this is an additional attempt to influence the blockchain world and an attack on its independence and decentralization. On the other hand, this is an opportunity to protect the rights of citizens who use cryptocurrencies.
One thing is certain - you can check a USDT wallet or check a BTC wallet equally simply and quickly in our solution Btrace - free AML check for each new user.
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