A new bill presented to the United States Congress on Wednesday could enforce blanket regulation of all stable coins. If it existed, any service provided in relation to these types of cryptocurrencies would become illegal without first obtaining approval from multiple government agencies:
“It is prohibited for a person to issue a stablecoin or a stablecoin-related product, provide stablecoin-related services, or otherwise engage in commercial activities related to stablecoin, including activities involving stablecoin issued by other persons in advance and on an ongoing basis, without written permission by the competent federal bank, the company and the Board of Governors of the Federal Reserve System. “
The bill, titled “The Stable Act,” aims to “protect consumers from the risks posed by emerging digital payment instruments like Facebook’s scales and other stablecoins.” With only one month left until the end of the 116th Congress, the bill faces an uphill battle that must be approved in good time.
Rohan Gray, assistant professor at Willamette Law, stated on Twitter that while the bill primarily targets private stable tokens issued by large tech companies, it was worded to encompass a “wide range of monetary activities.” Gray added that the bill “aims to prevent the kind of systematic” shadow banking “risk that led to the 2007-2008 global financial crisis”.
Democratic Party Congressman Rashida Tlaib, the main initiator of the law, said the stable law was designed to protect people of color and other minority groups who do not have access to regulated financial services.
It is vital to prevent cryptocurrency providers from repeating the crimes against low and middle income residents of big colored traditional banks. That’s why I’m proud to introduce #STABLEAct with @RepChuyGarcia and @RepStephenLynch. https://t.co/yorQPo6wz4
– Congressman Rashida Tlaib (@RepRashida) December 2, 2020
The bill was heavily rejected by the crypto community. Meltem Demirors, CoinShares chief strategy officer, responded to Tlaib’s tweets, stating that “cryptocurrencies are reducing the cost of servicing the populations historically excluded from the banking sector.”
She added that introducing the law would increase costs, increase compliance and cut off access to the groups of people Tlaib wants to protect.
In an eight-post thread on Twitter, Circle CEO and Co-Founder Jeremy Allaire claimed that the bill “represents a huge step backwards for digital currency innovation in the US and is limiting the accelerated progress of both the blockchain and fintech industries would”.
Wyoming House representative, Tyler Lindholm, believes the law goes against the fundamental ethos of decentralizing the crypto sector:
“Centralization of power for a decentralized world. No thanks. This industry has been light years more successful in giving non-banks financial freedom, and it has done so without cronyism as suggested in this bill. “
Erik Voorhees, CEO of Shapeshift, shared his opinion that the bill is doomed:
“Let’s not force crypto to behave like banks, perhaps? (And in fact it can’t and won’t).”