US lawmakers introduce an insurance law for eligible stablecoins

Josh Gottheimer, a member of the US House of Representatives Financial Services Committee and Representative from New Jersey, introduced legislation requiring the United States Federal Deposit Insurance Corporation (FDIC) to support stablecoins similar to fiat money.

Josh Gottheimer – US Legislator

In the draft of the Stablecoin Innovation and Protection Act 2022 published on Tuesday, Gottheimer offer Flag stablecoins issued by an insured custodian or specified non-bank issuers as “eligible.”

Under this definition, the bill states that “eligible stablecoins” are not securities or commodities under US law and can be redeemed at the request of the issuer.

In the case of non-bank issuers, the law would require the FDIC to establish a qualifying stablecoin insurance fund to ensure eligible stablecoin holders can exchange their tokens for US dollars upon request. Follow GottheimerThe bill aims to protect owners from “systemic risk, fraud and illegal financial activities.”

“Expansion into the crypto market offers tremendous potential value to our economy. But for cryptocurrencies to thrive in the United States rather than overseas, we need to give the market more guidance and security to drive innovation and protect users.

We should not stifle innovation in the crypto market. We should make sure we have the right safeguards in place and make sure our nation is a leader in fintech.”

In addition to insurance requirements, the Office of the Comptroller of the Currency (OCC) will have a regulator to define standards and requirements for stablecoin issuers. However, Gottheimer pointed out that the scope of the regulation should not extend beyond these qualifying stablecoins. The Securities and Exchange Commission and Commodity Futures Trading Commission will be “completely limited to reviewing unauthorized stablecoins and other cryptocurrencies,” according to the bill.

Crypto advocacy representatives, including the Blockchain Association and the Digital Chamber of Commerce, have expressed support for the regulation.

Teana Baker Taylor, policy director of the Digital Chamber of Commerce, hailed the bill as a way to level the playing field between “established stablecoin arrangements and new entrants” and put the US on track to develop a clearer regulatory framework for digital assets.

So does FTX CEO Sam Bankman-Fried comment on the new move by US lawmakers:

“It is interesting to see the moves by Rep. Josh Gottheimer and others to regulate and license stablecoins by ensuring they are 1:1 hedged.

Stablecoins have very promising potential for payments and finance. Regulatory oversight and clarity can provide the confidence and peace of mind that investors need.”

If the stablecoin bill is passed by both the House and Senate and signed by President Biden, it will go into effect in a year. The Senate Banking Committee also held a hearing on Tuesday to consider the Presidential Financial Markets Working Group’s stablecoin report released in November.

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