Maxine Waters, chair of the House Financial Services Committee, said she would prefer a new stablecoin bill after the recent banking collapse in which USDC fell off its dollar peg.
Representative Waters said the passage of a stablecoin bill has been delayed by an expected shift in the House majority to Republicans.
Stablecoins face renewed scrutiny after SVB collapse
He confirmed that he and Senate Banking Committee Chairman Patrick McHenry are focused on new stablecoin legislation supported by Democrats and Republicans.
The politician’s comments come amid fresh scrutiny of the stablecoin industry following the collapse of Silicon Valley Bank. SVB has a portion of the reserves used to back Circle’s USDC stablecoin. The stablecoin is pegged at $1 through active arbitrage on exchanges globally. They rely on the backing of on-chain or off-chain assets to facilitate their minting and redemption.
USDC lost its peg against the US Dollar amid $1 billion of redemptions after the Federal Deposit Insurance Corporation took control of the bank on Friday, March 10, 2023. Circle later tweeted that the attempt to withdraw $3 billion from the bank had failed.
Coinbase suspended USDC redemptions even as the coin’s price plummeted, reaching $0.92 on Kraken at around 10:40 a.m. ET.
Brief Recap on Stablecoin Draft Bill
The House first introduced the draft bill in September 2022. The American midterms initially delayed its passage.
The draft law calls for a two-year moratorium on algorithmic stable coins. It allows non-bank stablecoin issuers that receive state approval to register with the Federal Reserve within 180 days. Accordingly, the law requires the Fed to set forth a method for processing applications from non-bank issuers.
Bank issuers, on the other hand, would need to obtain approval from the Office of the Comptroller of the Currency.
Lawmakers Say Regulations Aren’t a Silver Bullet
On March 15, 2023, Representative French Hill, chair of the Banking Committee’s digital assets subcommittee, stressed the importance of the draft legislation to keep crypto companies in the US.
“By not developing a framework where everyone knows the rules of the road and we can encourage digital asset innovation, we are going to disable that market, and move it offshore,” the lawmaker told Fortune. going to do.”
Following the removal of USDC, Circle’s chief strategy officer pointed to laws in Singapore and Japan that, if implemented in the US, would require the Federal Reserve to oversee stablecoins and store them centrally rather than at a retail bank. will allow.
While Hill does not support Asian regulations, he acknowledged that a bipartisan bill would be a good starting point.
However, he cautioned that the regulations will not replace the due diligence carried out by stablecoin firms.
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