Updated House stablecoin bill drops CBDCs but gives the Fed new powers
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(Kitco News) - The U.S. House Financial Services Committee has shared an updated draft of the bill outlining proposed stablecoin legislation which gives more power to the Federal Reserve while also elimination clauses about exploring a digital dollar.
The latest draft is significantly shorter than the previous version, and it taps the “Board of Governors of the Federal Reserve System” to be the primary regulator and author of the requirements for qualified stablecoin issuers. “The primary Federal payment stablecoin regulators may issue such orders and regulations as may be necessary to administer and carry out the requirements of this section, including to establish conditions, and to prevent evasions thereof,” the draft bill reads.
The bill still allows state regulators to oversee stablecoin issuers operating in their jurisdiction, but gives them the option to hand responsibility to the Fed if they so choose.
“A State payment stablecoin regulator shall have supervisory, examination, and enforcement authority over a State qualified payment stablecoin issuer of such State,” the bill reads, but “may enter into a memorandum of understanding with the Board, by mutual agreement, under which the Board carries out the supervision, examination, and enforcement authority.”
It also gives the Fed new powers to intervene against state-regulated issuers in emergency situations.
“In exigent circumstances, the Board may, after no less than 48 hours prior written notice to the applicable State payment stablecoin regulator, take an enforcement action against a State qualified payment stablecoin issuer or an institution-affiliated party of such issuer,” it reads. The Board would have 180 days from the enactment of the bill to outline exactly what those “exigent circumstances” would be, and these provisions “do not preempt any law of a State and do not supersede any State licensing requirement.”
The new draft also removes the section in the earlier version which called for research into a possible central bank digital currency (CBDC) or ‘digital dollar’, which has been receiving considerable pushback from legislators and industry.
Finally, the bill proposes to amend the Investment Advisers Act, the Investment Company Act, the Securities Act, the Securities Exchange Act, and the Securities Investor Protection Act by adding a clause which excludes payment stablecoins from classification as securities. “The term ‘security’ does not include a payment stablecoin issued by a permitted payment stablecoin issuer, as such terms are defined, respectively, in section 2 of the [final bill],” it reads.
The draft leaves stablecoin reserve requirements and consumer protection rules essentially unchanged, and also maintains the two-year moratorium on so-called ‘algorithmic’ stablecoins.
The new draft of the stablecoin bill was published ahead of the June 13 hearing where the committee will get input from industry experts, including Circle co-founder and CEO Jeremy Allaire, Ava Labs founder and CEO Emin Gün Sirer, and Thomas Sexton III, President and CEO of the National Futures Association.
The committee will also hear from Steptoe & Johnson LLP partner Coy Garrison, formerly counsel to SEC Commissioner Hester Peirce, who has been a vocal critic of the enforcement actions of her own agency and has often come out forcefully and publicly against the positions of SEC chair Gary Gensler.