The cryptocurrency world has a lot of support from different nations and the USA is definitely one of these nations. Since the world of crypto is pretty volatile, there are certain cases where they might require some sort of backing. This is exactly what the US lawmaker is trying to do according to the top sites for crypto news.
According to the member of the House Financial Service Committee as well as the Representative of New Jersey, Josh Gottheimer, in order to ascertain the growth and development of crypto, there needs to be proper direction provided in the community as well as the entire crypto market.
“For cryptocurrency to grow and thrive … we must provide more direction and certainty to the marketplace …,” mentioned Josh Gottheimer. This definitely means that cryptocurrency requires some sort of support in order to stand on its own and that is exactly what the lawmaker is proposing we should do.
House Financial Services Committee member and New Jersey Representative Josh Gottheimer have made in the introduction to the legislation that would have the Federal Deposit Insurance Corporation back some of the very qualified stablecoins in a pretty specific manner that is very similar to the backing that is provided to the fiat deposits.
The Stablecoin Innovation and Protection Act of the year 2022 was released this Tuesday and in the draft of this Act, Gottheimer made a proposal of labeling all the stablecoins that were issued to be properly insured by the institutions as well as non-bank issuers.
Due to this definition, the bill would suggest that these stablecoins that are actually termed as qualified will not be considered commodities or securities under the laws of the United States of America. Hence, these stablecoins will be pretty much redeemable on demand from the person or institution that has issued it.
In the cases of certain nonbank issuers, the regulation would need the Federal Deposit Insurance Corporation, or FDIC, to create a particular Qualified Stablecoin Insurance Fund to properly ensure that all the holders of qualified stablecoin can efficiently exchange their tokens for U.S. dollars on demand. According to Gottheimer, the main aim of the bill is to protect the holders from “systemic risk, fraud, and illicit financing.”
“The expansion of cryptocurrency offers tremendous potential value for our economy,” said Gottheimer. “But for cryptocurrency to grow and thrive here in the United States, instead of overseas, we must provide more direction and certainty to the marketplace to help boost innovation and protect consumers.”
He added: “We shouldn’t stifle innovation in the cryptocurrency market. We should ensure the proper safeguards are in place and ensure our nation is a leading force in financial technology.”
In addition to the insurance requirements, the Office of the Comptroller of the Currency will largely have the regulatory authority to determine standards and requirements for stablecoin issuers.
However, Gottheimer specified that the legislation’s regulatory purview was not intended to extend beyond these qualified stablecoins — the Securities and Exchange Commission and Commodities Futures Trading Commission are “not restricted from examining non-qualified stablecoins and other cryptocurrencies” under the bill.
Representatives from crypto advocacy groups including the Blockchain Association and Digital Chamber of Commerce expressed their support for the legislation. Teana Baker Taylor, the Digital Chamber of Commerce’s chief policy officer, lauded the bill for leveling the playing field between “established stablecoin arrangements and new entrants” in addition to putting the U.S. on the path for a clearer regulatory framework of digital assets.
If approved by both the House and Senate and signed into law by President Biden, the stablecoin bill would go into effect after one year. The Senate Banking Committee is also holding a Tuesday hearing examining the President’s Working Group on Financial Markets’ report on stablecoins released in November.
