Democratic lawmakers introduced a bill that will regulate stablecoins, including Facebook’s Libra.
Congresswoman Rashida Tlaib, together with Rep. Jesús “Chuy” García and Rep. Stephen Lynch, revealed the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act.
The STABLE Act will require stablecoin issuers to have a banking charter and earn regulatory approval from the Federal Reserve, the FDIC, and other agencies before issuing the coin. They also must be FDIC-insured or maintain an equivalent number of dollars at the Federal Reserve.
That’s a high verge to achieve.
Even the “crypto banks” that earned bank charter in Wyoming are going through state-level processes that are not regulated by the Office of the Currency’s Comptroller. Furthermore, the FDIC doesn’t currently allow for insurance on crypto assets.
While the press release noted that the “COVID-19 Pandemic has exposed numerous barriers to accessing and utilizing mainstream financial institutions,” the authors are clear that they didn’t want bad actors flooding in to take advantage of low and middle-income Americans. It namechecks “shadow banks,” or the financial firms that are not regulated like banks but can issue loans and similar products.
However, Lynch and his colleagues want to blunder on the regulation’s side if cryptocurrency providers become like banks.
Rep. García had an equally suspicious tone:
The STABLE Act hasn’t been assigned to a committee, although Rep. Lynch heads the Task Force on Financial Technology.