A new bill was just introduced in the US Congress that mandates bank charters and regulatory approvals for stablecoin issuers. Stablecoins are cryptocurrencies that are tied to fiat currencies or commodities like gold to stabilize their value.
The Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act was introduced by U.S. Representatives Rashida Tlaib (D-Mich.), Jesus “Chuy” Garcia (D-Ill.) and Stephen Lynch (D-Mass.). The press release they issued about the bill named Facebook’s Libra crypto project (renamed as Diem) as an example of stablecoins it seeks to regulate.
According to the release, “Digital currencies, whose value is permanently pegged to or stabilized against a conventional currency like the dollar, pose new regulatory challenges [and] also represent a growing source of market, liquidity, and credit risk.”
The new bill details various new proposed requirements over 18 pages. The new expectations would require stablecoin issuers to secure a banking charter, obtain approval from the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and the national bank regulator before issuing a stablecoin. Furthermore, it would require these regulatory entities to conduct ongoing systemic risk analyses on these issuers. Lastly, stablecoin issuers would be required to have FDIC insurance or maintain sufficient reserves to easily convert funds to US dollars.
These rules would also apply to stablecoins that are tied to non-US currencies as well. In essence, this bill equates stablecoin deposits with traditional banking deposits.
The press release also referenced a prior letter that the bill sponsors sent to Acting Comptroller of the Currency Brian Brooks, which questioned his progressive approach to digital currencies. The main concern they had was with the expanding flexibility that Brooks was providing to banks in offering custody services to crypto platforms.
Rep. Tlaib noted on Twitter, “Preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of color traditional big banks have is critically important.”
With a Democrat majority in the US House of Representatives, it would seem likely to pass. If the two upcoming US Senate run-off races in Georgia are won by Democrats, then a Democrat-majority Senate would likely pass it as well. And if the electoral college votes and certifies Joe Biden as President, he will likely follow his political party and sign it into law.
The bill would impact many current major players in the stablecoin space who currently do not have bank charters. Some of these issuers include the CENTRE consortium (which consists of Circle and Coinbase), Gemini and Paxos. Crypto collateral tokens like DAI and algorithmic stablecoins like Basis.Cash would also likely be affected by it.Jeremy Allaire, CEO of Circle noted that the bill “would represent a huge step backwards” by capping the crypto industry’s innovation.
Until now, the chief complaint among many in government was that crypto coins are securities that should be registered and regulated by the Securities and Exchange Commission (SEC). Now, it seems they are saying that currency/commodity-pegged digital coins that are used as replacements for sovereign currency should be regulated as banking currency by the Federal Reserve. Their desire for expanding control is so great that even they either can’t see the hypocrisy themselves or simply have dropped all pretense at this point.
The enterprising nature of crypto projects makes compliance with these excessive regulations a virtual non-starter for most. If the big banks were subjected to these regulations years ago when they were in their infancy, they would never have gotten off the ground, let alone become the massively successful entities they are today. This bill essentially seeks to cut off crypto before it has a chance to grow.
This is the challenge of public coins and exchanges. As they have bent over backwards to follow amorphous rules and expanding regulations to remain compliant with government agencies, they are essentially walking into a fireball. Once crypto starts down this path of succumbing to compliance, it never ends until crypto is fully consumed and ceases to exist, which appears to be the ultimate goal of these agencies. The desire for government agency control grows exponentially as crypto projects comply with their unreasonable demands.
That is why META 1 Coin Trust operates in a superior jurisdiction and remains a private coin with a private exchange. We are not issuing a security and we are not a bank. There is no need for registration with government agencies when individual Humans conduct private transactions. META 1 continues to stand up for civil liberty, freedom and abundance for all Humans, independent of the identities and fictional characters assigned to them by global states.