- The STABLE act seeks to apply strict measures for stablecoins which could impact the adoption of Bitcoin.
- The law could be a step backwards for the crypto industry in the United States.
Bitcoin is currently remaining strong above the important $19,000 mark. The cryptocurrency seems to be consolidating to make the final jump beyond $20,000 before the end of the year. However, a new bill introduced by the U.S. Congress threatens to destabilize the market.
Presented by lawmakers Rashida Tlaib, Jesus Garcia, and the Chairman of the Special Forces on Financial Technology Stephen Lynch, the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act introduces a series of strict measures for stablecoins and their issuers. It aims to “protect consumers from emerging risks from emerging payment instruments”.
Although its progress has been stalled for more than a year, the press release on the law mentions Facebook’s Libra as one of these risks, among other stablecoins such as Tether and USDC. The law is intended to regulate all commercial activity related to stablecoins and their issuance. Therefore, if the STABLE law is passed it will require:
- All issuers of a stablecoin to obtain a banking charter.
- Stablecoin’s service providers to follow the appropriate regulations for a bank.
- Companies or banks issuing a stablecoin must obtain approval from the Federal Reserve, FDCI, and any other “appropriate” banking agency 6 months prior to the issuance of the asset.
- Finally, issuers of a stablecoin must obtain insurance from the FDCI or “hold reserves at the Federal Reserve” to ensure that the asset is backed by U.S. dollars.
In the statement, Congresswoman Tlaib says that they are “getting ahead of the curve” before companies that provide crypto services “repeat crimes against low- and middle-income households” and people of color. The congresswoman affirms that these “crimes” have been committed previously by banking entities. Tlaib said:
The Trump administration’s deregulation of our financial system has opened the door for tech companies to consolidate their power by preying on people of color with products that promise inclusion but only undermine our banking system.
Threat for the adoption of Bitcoin and Ethereum?
According to the crypto community, the new laws is a step backwards for the industry in the United States. If passed, it could make illegal a number of stablecoin that would affect several sectors, including Ethereum’s DeFi sector.
In the last few months, PayPal, Square, and other well-known companies have invested in Bitcoin. As the specialist Adam Cochran said, much of this investment first passes through a gateway in the form of a stablecoin. Therefore, he believes there could be a negative impact on the industry in general:
If you cut off stablecoins the markets will bleed. Not to mention a significant portion of institutional trading capital in the US transacts in stablecoins. Let’s hope this bill goes no where.
Agreeing on that, other community members have noted that cryptocurrencies and stablecoins have served to allow the unbanked to access financial services. Hayden Adams, inventor of the decentralized exchange based on Ethereum, Uniswap, said:
If the U.S. wants to protect consumers from risky stablecoins it should release an official government backed USD token that you can pay taxes with. This just hurts innovation and provides no alternatives. Bullish for ETH, BTC, and synthetic dollars though.