The draft of a bill concerning stablecoins and Central Bank Digital Currencies (CBDCs) has been circulating among U.S. lawmakers since last fall. The main purpose of this bill is to protect American citizens and it has been designed to protect them from the risks related to Endogenously Collateralized Stablecoins and Qualified Payment Stablecoin Issuers.
Endogenously Collateralized Stablecoins are those that are backed by digital assets issued by the stablecoin issuer itself, while Qualified Payment Stablecoin Issuers include banks, deposit institutions and non-bank institutions that have applied for regulatory clearance. The bill proposes to ban the issuance, creation or origination of endogenously collateralized stablecoins for two years as these are known to be highly risky for users.
However, the bill makes certain statements about Qualified Payment Stablecoin Issuers that raise some questions. Even though these institutions have been approved for regulations, the treatment that some crypto-adjacent banks such as Custodia have received from the government gives rise to the doubt. Is the government playing an overly paternal role, making the way for only certain corporations?
The bill also calls for a study to be released within one year and a briefing on CBDCs within 180 days of the bill becoming law. These two parameters coming directly from the government may not be giving a fair opportunity to the stablecoin issuers, who are not related to big corporations.
It is also important to note that the bill does not suggest the issuance of a Federal Reserve-controlled U.S. dollar CBDC, but it is likely that the government could implement such a digital currency in the future. If it does, the consideration of personal privacy and appropriate conduct of monetary policy should be navigated to assure a fair deal for the citizens of the U.S.
In conclusion, due to the risks attached to Endogenously Collateralized Stablecoins, the draft of this bill makes sense from a safety perspective, however, the ambiguous approach towards Qualified Payment Stablecoin Issuers and the study on CBDCs may not ensure a fair opportunity to the non-corporate entities. The bill is still in draft form, therefore, U.S. citizens should stay attentive to ensure the discourse surrounding stablecoins and CBDCs is handled in a manner that benefits citizens rather than the government officials.
Alice Taylor
- 2023-04-17
Questions Around US Bill On Stablecoins And CBDCs
A draft of a bill concerning Endogenously Collateralized Stablecoins and Payment Stablecoin Issuers has been circulating in the US lawmakers. The bill proposes to ban the issuance, creation or origination of endogenously collateralized stablecoins for two years as these are known to be highly risky for users. While there are some positive aspects of the bill, it raises some questions about fairness and privacy concerns.
