As the public conversation around stablecoins grows, the U.S. Subcommittee on Digital Assets, Financial Technology and Inclusion held a hearing on April 19 to discuss the role of stablecoins in the United States. During the hearing, Austin Campbell, an adjunct assistant professor at the Columbia Business School, expressed concern about the country’s lack of regulatory environment for fiat-backed stablecoins, saying that countries like Singapore, Dubai, Abu Dhabi, and the United Kingdom have already proposed frameworks to fill that landscape.
In addition, during the hearing house Financial Services Committee chair Patrick McHenry released a discussion draft bill that attempts to address stablecoins used for payments and a central bank digital currency. Subcommittee Chairman French Hill expressed agreement with the need for legislation in the matter, while ranking member Maxine Waters suggested that the compromise bill needs to be updated to reflect recent events.
There is growing concern surrounding the lack of regulation for fiat-backed stablecoins as these digital assets are increasingly being used as a digital store of value and for payments. Major stablecoins including Tether (USDT) and USD Coin (USDC) have temporarily de-pegged from the U.S. dollar, and a draft of proposed legislation by U.S. lawmakers has even proposed a ban on algorithmic stablecoins such as TerraUSD Classic (USTC).
The lack of fiat-backed stablecoin legislation in the US has the potential to drive issuers away, potentially forcing them to seek out a more welcoming regulatory environment. This could have a negative impact on adoption, as a strong regulatory framework is key to ensuring trust in stablecoins and the market, and to promoting industry growth and innovation.
Overall, the U.S. needs to pass legislation regarding stablecoins in order to remain competitive in the digital asset landscape, and to keep its current users as well as digital asset investors safe. It is clear from the hearing that members of the house understand the need for legislation, and now it is up to the house leadership to reach a compromise in order to pass the legislation.
Alina Sanders
- 2023-04-19
Regulatory Environment for Stablecoins in the US Under Discussion
The U.S. Subcommittee on Digital Assets, Financial Technology and Inclusion held a hearing on April 19, 2020 to discuss the role of stablecoins in the United States. Members of the house expressed agreement in the need for legislation, yet the house leadership must reach a compromise in order to pass the legislation.
