Forex News

US Republican Bill Proposes Major Changes to Stablecoin Regulation

Published by
Nonhlanhla P Dube
  • A new bill has been introduced in the US House of Representatives by Republican senators, which proposes the regulation of stablecoins.
  • The proposed bill aims to take control of payment stablecoins from the SEC and give it to federal and state bank and credit union regulators.
  • The bill clarifies and updates US laws to confirm that stablecoins are not securities and should not be regulated by the SEC. This development could have implications for the global regulation of stablecoins, including in South Africa.

In recent news, a new bill has been introduced in the US House of Representatives by Republican senators, proposing a regulation on stablecoins. Stablecoins are digital assets whose value is pegged to an underlying asset such as the US dollar, which is aimed at providing stability in the volatile cryptocurrency market.

The proposed bill aims to relinquish authority from the Securities and Exchange Commission (SEC) and instead give it to federal and state bank and credit union regulators. The bill declares that stablecoins are not securities and, therefore, should not be regulated by the SEC. This clarification and update in US laws could bring about significant changes to the stablecoin market.

The bill is tailored to focus on the rules governing the registration process for individual potential stablecoin issuers. The previous draft released last fall was twice the length of the new proposal. The new draft has been made to specifically target the registration process, bringing in greater clarity for potential stablecoin issuers.

The proposed bill envisions a more significant role for state regulators in the market. However, the vast majority of states do not yet have a stablecoin issuance system. The final version of the bill was drafted by the committee’s Republicans and has been described as a “starting point” for discussions with House Democrats, the Senate, and the White House on stablecoin regulation in the coming months.

The stablecoin market is estimated to be worth more than $180 billion and operates without a specific legal framework. This has led to a “war of territory” between regulators, with the Commodity Futures Trading Commission (CFTC) wanting to regulate stablecoins as commodities and the SEC wanting to regulate them like securities.

This development in the US regulation of stablecoins could have implications for South Africa as well. With the increasing adoption of cryptocurrencies in South Africa, stablecoins could provide a much-needed solution for investors who are wary of the high volatility associated with cryptocurrencies. However, the lack of a clear legal framework around stablecoins in South Africa means that investors could be hesitant to invest in this asset class. Therefore, the proposed bill in the US could set a precedent for other countries to follow in regulating stablecoins, providing greater clarity and security for investors globally.

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

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Published by
Nonhlanhla P Dube

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