Stablecoins Get New Regulations: CEOs Held Personally Accountable
• House Republicans have released a new discussion draft for stablecoin legislation, emphasizing personal accountability of stablecoin issuer CEOs.
• The draft bill outlines regulations for payment stablecoins, including reserve requirements and classification as securities.
• The proposed legislation also holds the chief executives of stablecoin issuers personally accountable for the accuracy of information on reserves.
House Republicans Introduce New Stablecoin Legislation
House Republicans have released a new discussion draft for stablecoin legislation that focuses on personal accountability of stablecoin issuer CEOs. It provides clearer definitions and regulations for payment stablecoins, excluding algorithmic ones, such as reserve requirements, classification as securities and CEO accountability.
Reserve Requirements for Payment Stablecoins
The bill states that issuers can be subsidiaries of federally insured depository institutions or state or federally-regulated nonbank companies. A key provision requires payment stablecoins to be fully backed by safe reserves subject to monthly reviews by registered accountants to ensure greater stability and transparency. Additionally, it settles the debate over the classification of these assets as securities which has regulatory implications for oversight by either the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission.
CEO Accountability Under Proposed Bill
The proposed legislation also holds the chief executives of stablecoin issuers personally accountable for the accuracy of information on reserves with potential criminal liability for false reports. Representative Patrick McHenry’s financial services committee is also working on legislation to regulate market structure in the crypto sector addressing industry questions on agency roles; a subcommittee has scheduled a hearing this Thursday to continue this focus on regulation at congressional level.
Reception from Democrats
Though immediate bipartisan support is unlikely due to lack of Democratic input, a copy was provided to Representative Maxine Waters’ staff in hopes it will initiate new negotiations. Despite frustration from Waters’ regarding this exclusion from input, there is hope that progress can still be made towards achieving bipartisan consensus around this issue in Congress.
In conclusion, House Republicans are continuing their efforts towards introducing regulatory clarity concerning payment-type cryptocurrencies through this second attempt at a discussion draft that focuses heavily on personal accountability amongst its provisions related to reserve requirements and other forms of regulation overseen by various agencies such as the SEC and CFTC among others