That's because the bill, which takes direct aim at stablecoin companies such as Tether as well as the SC-curious Facebook, would require any company issuing a stablecoin to have a banking charter and be approved by the Federal Reserve and FDIC—no small feat for digital asset firms.
Stablecoins are a type of cryptocurrency whose value is pegged to another asset, often the US dollar.
The bill is ostensibly written to protect lower- and moderate-income consumers who have found themselves locked out of the traditional banking sector. Tlaib et al are pressing the case for regulation that prevents cryptocurrency companies from adopting the bad habits of big banks and further marginalizes vulnerable populations.
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Meltem Demirors, CoinShares' Chief Strategy Officer, said the bill would do the opposite of what it intends:
"Cryptocurrencies LOWER the cost of servicing populations that have historically been excluded from the banking sector," she wrote. "Raising costs and compliance obligations forces companies to cut access for unprofitable clientele."
this has the OPPOSITE effect
cryptocurrencies LOWER the cost of servicing populations that have historically been excluded from the banking sector. raising costs and compliance obligations forces companies to cut access for unprofitable clientele.
Jeremy Allaire, CEO of Circle, which issues the USDC stablecoin, played up innovation that has come from outside traditional banking: "The STABLE Act would represent a huge step backwards for digital currency innovation in the United States, limiting the accelerating progress of both the blockchain and fintech industry."
4/8 An enormous amount of the innovation brought to the underbanked and small businesses has been driven by non-bank fintech companies (Stripe, Square, PayPal, Circle, Coinbase, Apple, Google and many many others)
Willamette University College of Law Assistant Professor Rohan Grey, who provided input on the bill, shot back that innovators need guardrails. "Oh the purpose of regulations is to give industry players whatever they want?" he wrote. "Some people want to act like ignorance of banking history is a principled position."
Oh the purpose of regulations is to give industry players whatever they want?
Yeah we've been here before and done that.
Some people want to act like ignorance of banking history is a principled position.
Meanwhile, cadets in the XRP Army think this isn't so bad—especially the part that mandates stablecoins must maintain $1 dollar in reserve for every stablecoin issued.
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This is essentially an act to hold SC issuers accountable for their reserves. No more printing money out of thin air. Proof of reserve is required to issue. 1:1 (SC to Dollar as an example)
With the US likely headed toward another two years of divided government, this bill may not be talked about much beyond this week. Instead, cryptocurrency users should expect government's version of stability—legislative and regulatory gridlock—with or without the coins.
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