- U.S. Congressman Warren Davidson stated that the stablecoin bill would be more likely possible in the first quarter of 2023
- There are numerous draft bills that work toward stablecoin regulation that aims to protect the consumer and the market.
Digital assets are no stranger to regulatory bills. Due to market turbulence and gradual regulatory developments on stablecoin as it falls into several regulatory gaps, there has been a blast of cryptocurrency-related news in recent months.
A draft stablecoin bill in the United States House of Representatives is in progress that focuses on regulating stablecoins that would impact its issuers and collateralization. However, it is unlikely that the United States House of Representatives could pass the bill to regulate stablecoins by year-end.
Stablecoin Bill Timeline
Initial plans aim to release a draft of the bill this year. But according to the news of Kitco, there is a slim chance that lawmakers could pass the bill to regulate stablecoins at the end of the year as stated by U.S. Congressman Warren Davidson. The legislator further stated that the timeline would be more likely possible in the first quarter of 2023. Since the lawmakers would further address the potential risks of stablecoins, the timeline for the stablecoin bill would be delayed.
The stablecoin bill requires the issuers of stablecoins in the US to be duly approved and completely secured by “highly liquid assets”. Also, it would address the matters of the role of regulatory agencies, the likelihood of a future digital dollar, and how it would regulate the customer money held by crypto platforms are a number of points to clear up and settle.
At this juncture, lawmakers are more mindful of the November midterm elections and also as the legislative calendar comes to an end. The stablecoin bill is unlikely to make it through this year.
Bills Aimed At Regulating Stablecoin
The Biden administration and the legislators backing the bill have warned of potential risks and consequences posed by stablecoins to consumers and the market. Due to the absence of rules and framework in stablecoins as it is meant to maintain steady value by being tied to an asset class such as fiat currency like the U.S. dollar, U.S. Congress has taken serious efforts regarding stablecoin. There are several draft bills that work toward stablecoin regulation such as the Keep Your Coins Bill and Stablecoin Innovation and Protection Act of 2022.
The stablecoin bill also referred to as the Waters-McHenry bill is being discussed by Congresswoman Maxine Waters and Ranking Member Patrick McHenry who have been working to reach an agreement on the stablecoin regulation. The proposed stablecoin bill would have a two-year prohibition on coins similar to TerraUSD, an algorithmic stablecoin that collapsed earlier this year. Since the bill is still new, it is likely to go through numerous revisions before proceeding through multiple stages and then becomes a law.