The proposed regulation may fundamentally change the stablecoin ecosystem , so it is worthwhile to see what the proposed legislation includes.
As 2020 draws to a close, there is also a proposed legislation in the encryption field. If this proposal is introduced in accordance with the current writing, it may change and curb the rapid growth and development of the stable currency track. According to the main supporters of the legislation, the “Stable Currency Act” (STABLE Act) proposed by several legislators was drafted to prevent abuse, opacity, and the potential rise of stablecoin-based shadow banking systems . These are of course valuable goals, but the specific details of how to achieve these goals, namely the passage of specific clauses in the bill, caused protests from the broader blockchain and crypto communities almost immediately.
From the perspective of the proposed bill itself, stablecoin issuers must comply with the following specific obligations in order to avoid breaking the law.
First, any stablecoin issuer needs to obtain a federal bank charter that goes beyond compliance with state regulations and/or currency transfer laws. Secondly, any issuer must fully comply with and fulfill existing banking regulations. These regulations exist for a reason, but their cost and complexity may favor existing ones rather than new entrants. In addition, any stablecoin issuer must obtain approval from the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) six months before the issuance. Finally, the stablecoin issuer itself—unlike a financial institution with FDIC coverage—needs to obtain FDIC insurance, or directly deposit USD reserves with the Federal Reserve.
Look again, some comments and feedback surrounding this legislative proposal mainly revolved around the following two points. First, the bill seems to clearly focus on non-existing and start-up institutions, rather than those large institutions that have recently begun to accept and use stable protein as a medium of trade. Specifically, the bill does not seem to focus on general non-bank dollar debt, but only those that are defined as stable currencies. Second, the complexity, cost, and time required to fully comply with these additional rules are beyond the scope of currency transmission and other country-specific legislation that is already being implemented, and may become a major obstacle to the development of stablecoins in the future.
Especially when the stablecoin industry continues to grow rapidly, it is very real that other jurisdictions may formulate regulations that are more conducive to encryption technology to take advantage of this fast-growing market.
In summary, as the debate surrounding the Stability Act continues, there are a few things to remember.
The legislation is awaiting approval. Some people may think that even if this legislation is proposed, it is a negative trend, but on the contrary, it should be regarded as a sign of the maturity of the crypto asset industry. It is worth remembering that although the US Congress has proposed and debated nearly 30 blockchain and encryption bills during 2020, as of this writing, no substantive legislation has been passed. Whether positive or negative, the passage of blockchain or encrypted asset legislation does not seem to be a priority for federal lawmakers.
Nevertheless, contact with legislators and the policy-making process is necessary for all major stablecoin players, and it is encouraging that since 2017, many large organizations in the field have become more involved In the process of making laws.
The “Stablecoin Act” emphasizes CBDC. Although it is not clearly stated in the proposed legislation, the ultimate effect of this legislation will be to gradually introduce central bank digital currencies (CBDCs) in nature instead of pure private choice. The shift and development to more centralized cryptocurrency options are already underway, and this type of legislation will only accelerate the process. Some people believe that CBDC issued and managed by the central government does not represent a real cryptocurrency, but it is too simple to ignore this trend.
No development can be achieved overnight. The stablecoin organization will play an indispensable role in the further maturation of encrypted assets regardless of its status.
Price should not be the point . The drafting of this legislation, at least to some extent, is partly driven by the rapid increase in cryptocurrency prices in 2020. Especially in the current environment, due to COVID-19, economic and social inequality has been widened, and paying attention to price increases may not always be conducive to wider acceptance and understanding. On the contrary, paying attention to and emphasizing the benefits that all users of cryptocurrency can achieve in terms of reducing costs, speeding up transaction processing, and improving overall transparency should be the focus of crypto advocates.
But fortunately, these seem to be the areas that the “Stablecoin Act” respondents have been focusing on so far.
Regulation and legislation are never perfect from the beginning, just as no idea is fully formed and ready to be implemented. Nevertheless, the formulation and proposal of this legislation should also become a wake-up call for stablecoin issuers and the entire encrypted asset industry. Cooperation, collaboration and education with legislators and the entire business community will become the core themes of blockchain and crypto industry advocates in 2021.
Original author: Sean Stein Smith
Original link: https://www.forbes.com/sites/seansteinsmith/2020/12/09/cryptocurrency-legislation-is-on-the-rise–what-the-proposed-stable-act-could-mean-for -crypto/?sh=62d5895a633d
