Leaders of the House Financial Services Committee continue to negotiate the terms of a proposed bill to regulate cryptocurrency, even as the window for action toward the midterm elections narrows.
according to BloombergThe latest draft legislation will ban algorithmic stablecoins like TerraUSD’s Luna for two years, while regulators are conducting a study of “in-house” tokens.
The word “endogenous” means something that is produced or synthesized in an organism or system. Before TerraUSD and Luna exploded in May, its creators relied on the Luna create or burn algorithm to keep the value of TerraUSD stable at $1.
More than $40 billion in value evaporated in a matter of days, and the crash became Appendix A in a crypto critic’s guidebook and fueled the interest of lawmakers and regulators.
Previous versions of the bill required stablecoin issuers to maintain a 1:1 liquid reserve for all stablecoins in circulation and also limit the types of assets they could support.
Latest project – which Bloomberg Notes Currently sitting with the Deputy Committee Chairman. Maxine Waters (D-CA), and may need to be reviewed by a representative senior member. Patrick McHenry (R-North Carolina) – Goes further.
Stablecoins are now giving banks and other financial institutions a way to issue stablecoins, in conjunction with their existing network of regulators. But this network will now also include state regulators, giving state-approved stablecoin issuers a 180-day fast track to obtaining the federal green light.
The Business News Service says the committee may put the bill to a vote as soon as next week.
The stablecoin has been in the works for several months and has been held back in the past, in part due to concerns raised by Treasury Secretary Janet Yellen. Yellen repeatedly cited the collapse of TerraUSD when she called for more regulation of the crypto space.
Lift the rope similarly. Waters highlighted the risks of stablecoins earlier this year, saying that “investigations have shown that many of these so-called stablecoins are not actually backed by reserve assets,” and that a lack of investor protection could “threaten the financial stability of” the United States.
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