- The US legislation could place a two-year ban on the algorithmic stablecoin.
- Bloomberg had obtained a copy of the drafted bill.
- Committee members have been working to reach an agreement.
The US legislation could place a two-year ban on coins similar to TerraUSD, the algorithmic stablecoin, reported Bloomberg. Bloomberg had obtained a copy of the latest version of the bill, which would make it illegal to create or issue new “endogenously collateralized stablecoins”.
Breaking! US House is proposing a two year ban on algo based stablecoins like $UST!
— Lark Davis (@TheCryptoLark) September 21, 2022
The drafted bill would allow the Treasury in consultation with the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the Securities and Exchange Commission (SEC) to conduct a study on the algorithmic stablecoin.
The article further explains that House Financial Services Committee Chairwoman Maxine Waters and Ranking Member Patrick McHenry have been working to reach an agreement on the stablecoin legislation.
Though people familiar with the discussions said that it’s unclear if McHenry, a Republican, has approved the latest draft. The terms of the proposal could still change before a final version is released.
The upcoming bill would also enable banks and nonbanks to issue stablecoins. Bank issuers would seek approval from their typical federal regulators.
The legislation would prohibit businesses from commingling customers’ funds including stablecoins, private keys, and cash, with company assets to protect consumers in cases of bankruptcy.
The drafted bill would also allow the government to study the impact of a potential US digital dollar, also known as a central bank digital currency (CBDC), including the possible effects on the financial system and banking sector, as well as the privacy of Americans.
However, the drafted bill has not been published to the public.