Congress Member Drafts New Bill To Put Stablecoins Under SEC’s Authority• April 29, 2022 10:35 pm • Comments
Congressman Tom Emmer has recently drafted a new bill that aims to give the SEC authority to regulate some stable coins.
The bill is focusing on stable coins that are able to pay out dividends and is requiring those stable coins to have to register with the SEC.
Dividends from stable coins have a tremendous appeal for many users due to the fact that it distributes income back to the coin holder which is particularly attractive given that the value of the stable coin does not change much.
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So far, it seems that the bill is targeting stable coins that actually have the dividend functionality built within their protocol instead of those that utilize third-party platforms.
U.S. Representative Tom Emmer has drafted a bill that could give the SEC jurisdiction over certain stablecoins.
The bill concerns dividend-paying stablecoins and would allow the SEC to create a voluntary regulatory regime.https://t.co/5GESeFaE8F#stablecoin #crypto
— BitLaw (@CryptoBitLaw) April 28, 2022
The bill appears to concern stable coins with dividends built into their protocol (such as UST), but not third-party lending and staking platforms that would pay out dividends on existing stable coins.
If the bill succeeds, the SEC would be required to create a new framework for regulating these stable coins.
Those rules would dictate requirements around the assets backing stable coins, namely the types of assets permitted and rules for storage.
Participation in the regulatory program would be voluntary, not mandatory, for stable coin firms.
Emmer has previously pushed for more open crypto legislation, making this angle unsurprising.
The SEC has already been criticized by the crypto community for over-extending its authority over the digital asset industry and declaring some specific assets to be considered securities.
The fact that it is now also turning its attention to stable coins can be particularly concerning given that stable coins making up a very significant market volume within the crypto market.
Chairman Gary Gensler had already made some comments last year that stable coins might be considered securities and could likely impose regulations that would once again stifle innovation within the industry.
The question remains now is whether or not this proposed bill will actually get approved by Congress.
The bill also seems to be pretty vague when it comes to the definition of what is considered a stable coin that would fall under the jurisdiction of the SEC.
As a result, many within the crypto community fear that the committee could use this open interpretation to pick winners and losers within the industry.
— CryptoViet News (@CryptoVietNews) April 28, 2022
But the proposed regime would not seem to apply to several of the largest stable coins by market cap — USDT, USDC or BUSD, for example.
Members of Emmer’s staff did not respond to The Block’s requests for comment on the status of the draft bill.
The prospect of stable coin regulation has been a top priority for crypto-focused legislation recently. The Biden administration’s financial regulators have been pushing to limit asset-backed stable coin issuance to bank-like institutions.
Republicans like Emmer are generally fond of more open-ended frameworks, including options for registrations with different regulators. Critics say that optional registration leaves regulators no tools to pursue bad actors.
As of now, the draft bill is still under review and the status of it has not yet been revealed to the public.
But the bill would not force the SEC to oversee dividend-producing stablecoins. Given that most of the revenue available to stablecoin holders comes from third-party lending or staking platforms, it is unclear how much fits into this regime. #BTC #NFT #bitcoin #ETH
— Anna (@SharonA05959006) April 27, 2022
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