The U.S. Congress appears to have an interesting week ahead, as the House of Representatives is set to debate a draft bill which aims to regulate the operations of stablecoins within the nation.
Meanwhile, the chairman of the Security and Exchange Commission (SEC) is also expected to appear in Congress during a hearing which aims to probe and examine the activities of the commission in recent times.
New Stablecoin Bill Set For Hearing On Wednesday
On Wednesday, April 19, the U.S. House of Representatives, the lower chamber of the U.S. Congress, will hold a hearing on a new draft bill that proposes “to provide requirements for payment stablecoin issuers, research on a digital dollar and for other purposes.”
Stablecoins are a type of cryptocurrency whose value is pegged to another asset such as a fiat currency, exchange-traded commodity, e.g. gold, or another cryptocurrency. These tokens are a vital part of the cryptocurrency market as they offer investors a stable monetary value. Common examples of stablecoins include USDT, USDC, BUSD, etc.
The 72-page draft bill slated for hearing on Wednesday aims to make the Federal Reserve the regulatory oversight of non-banking institutions which issue stablecoins such as Tether for USDT, etc. Meanwhile, insured banking institutions that want to offer stablecoin services will fall under the regulation of the appropriate Federal banking authority.
Furthermore, the bill proposes that foreign operators be mandated to register with the appropriate authority before rendering their services to the American populace. Failure to register by a stablecoin issuer will be penalized $1 million and meted a possible five-year imprisonment sentence.
In addition, the draft bill introduces other operation requirements, which include each stablecoin issuer possessing the needed technical expertise and governance structure. As expected, stablecoin operators will also be mandated to hold reserves in U.S. dollars or Treasury bills, which provide backing for the stablecoins in circulation.
Gensler Set To Appear Before The U.S. Congress
In other news, a day prior to the congressional debate on the stablecoin bill, the U.S. House Committee on Financial Services is expected to take up the topic of “Oversight of the Securities and Exchange Commission”, during which SEC Chairman Gary Gensler is expected to appear as a witness.
According to the committee majority staff, the hearing will serve to examine the regulatory developments, policy-making and activities of the commission since the last SEC oversight hearing that occurred on October 5, 2021.
The congressional hearing on Tuesday will also review a recent definition change of the word “exchange” by the commission, which classified cryptocurrency and digital asset exchanges as types of securities exchanges.
Already, the SEC chairman is already facing internal criticism over this policy as SEC commissioner Hester Pierce already released a damning rebuttal.
Strongly showing her dissent against the amendment of the definition of exchange, Pierce said:
“Rather than embracing the promise of new technology as we have done in the past, here we propose to embrace stagnation, force centralization, urge expatriation, and welcome extinction of new technology. Accordingly, I dissent.”