WASHINGTON—This week, Congresswoman Rashida Tlaib (MI-13), along with Congressmen Jesús “Chuy” García (IL-04) and Chairman of Task Force on Financial Technology Rep. Stephen Lynch (MA-08), introduced the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act, which would protect consumers from the risks posed by emerging digital payment instruments, such as
Latest proposed US crypto regulation emerged in Washington this week when the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act was introduced. It aim is to protect consumers from the risks posed by emerging digita…https://t.co/oUZdHPwyKshttps://t.co/hjgsdKECZc
If the U.S. wants to protect consumers from risky stablecoins it should release an official government backed USD token that you can pay taxes with. (h/t @moodysalem91)
This just hurts innovation and provides no alternatives.
Bullish for ETH, BTC, and synthetic dollars though. https://t.co/lDFpQBCxRi
Tether is going to claim they are no longer a stable coin, just a speculative cryptocurrency that is organically pegged to the USD using *INSERT MAGIC ALGORITHM HERE* and therefore do not need a banking charter.
Actually the reason why the bitcoin guys are freaking out is because the law handles that loophole by including these sort of third-parties as financial instruments for the purpose of the law, and covering both the stated intent and the actual effect "stability" in their definition of stablecooin.
Basically if you either peg the coin to a currency explicitly, state that the goal of the coin is have a fixed redemption value (as close as can be), or the effect of the coin produces a stable redemption value (even if you can't directly redeem the stablecoin) - it counts as a stablecoin.
Which is why we're probably going to see some real weird efforts at turning this into regulatory wack-a-mole with coins being pegged to other coins that are pegged to other coins that are sort of pegged to actual currency but not really.
They can't regulate stablecoin issuance by entities outside of the United States.
They can, very much, regulate US companies who issue stablecoins at scale.
The latter, in the most optimistic manner, is actually healthy.
In theory, more people around the world holding USD, in some form, and using it to transact with merchants is good for the dollar, and for the United States. Stablecoins enable that exceptionally well. So I don't immediately view this as regulation attempting to ban stablecoins.
And, if people around the world know those coins are backed by actual dollars, that's not an inherently bad thing.
The government can still print USD to its heart's content and practice all sorts of financial easing.
They just want to be the one printing the dollars, and not Tether.
Of course, there are always side effects to regulation, so it wouldn't be all good. But making sure Facebook has an actual bucket of USD backing Libra prior to launch is not wildly off base and may do much more good than harm over time.
To me the stablecoins subjext isn't much of an issue I get it. But running a node "illegally", their gross inexperience as well as likening ETH to lawlessness and shadow banking is telling me there will be more stringent regulation to come unless they educate themselves quickly.
I asked about that distinction.... they did not. I also asked if they consulted anyone from the Ethereum Foundation when crafting this bill. They did not.
They have zero clue how decentralized nodes work or why they matter or the implications on ethereum (what all theses table coins run on) of this bill.
They also don't get that 99% of peoples problems with this bill are the unintended consequences that will arise if passed.
Agreed some regulation would be good, but requiring a banking charter seems unnecessarily onerous. Just require a custodial account at a chartered bank and have the bank publish the balances on a regular basis.
These regulations tend to be influenced by lobbyists whose incentive is set the cost of compliance where their clients, but not their clients' competitors, can pay for it.
Yep, if you’re saying you’re backed by cash for your coin, show it. USDC mostly has, Tether has not.
DAI has proven it - heavily overcollateralized asset are backing it on chain. If you can show that your assets are backed up by immutable code with control over hundreds of millions of dollars of assets I don’t think that a banking charter for MakerDAO should be needed.
US Govt. mandates freeze of all transfers of USDC. The companies oblige. Now any usdc sitting in a smart contract is gone. Funds are lost forever. Users that do still hold USDC and haven’t tried to trade away before such a freeze happens will be forced to KYC to redeem.
DAI is backed ~40% by usdc. Surely such an action would cause some troubles?
Yeah, hilariously they are literally creating systemic risk here.
On twitter this Rohan Grey fellow is arguing that if you run a node you're responsible for that risk, so you shouldn't run a node. This toy is completely off his rocker and is wholly uninformed about how anything re Ethereum works.
I don't think that's actually in the bill though, it's just what happens when you get an argument on Twitter about tech regulation between someone who doesn't understand regulation and someone who doesn't understand tech.
i don't really know how this will end. for day traders i will love to inform you about an options trading competition i joined yesterday. that's u/level01io can join it, you trade with demo coins and win real coins.
you can tell what good news this is because the cryptids are fucking shitting about it
Main proponent is Rohan Grey. Today his Twitter is answering the question "what were they thinking" at tedious length to the dumb questions of upset butters, as he explains in small words how issuing currency notes or tokens that you say are money because they're backed by a reserve is a banking activity.
Let me guess it's "wildcat banks pretending they aren't are bad...you morons" the bill and butters are screeching "Nooooooo you're gonna kill innovation! Laws are useless and US will go bankrupt because blockchain scams will go overseas reeeeeeeeeeeeee".
“Getting ahead of the curve on preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of color that traditional big banks have is—and has been—critically important,” Congresswoman Tlaib said.
If one reads the attached one-pager of the STABLE act, one can see that it is not necessarily illegal, but it will be regulated. The issuer of a stablecoin would need to get a charter before issuing it. At first thought, this seems like a good idea.
Hopefully, the government is taking these measures to protect the small man, not fuck the crypto economy.
Tlaib, García and Lynch Introduce Legislation Protecting Consumers from Cryptocurrency-Related Financial Threats
December 2, 2020
WASHINGTON—This week, Congresswoman Rashida Tlaib (MI-13), along with Congressmen Jesús “Chuy” García (IL-04) and Chairman of Task Force on Financial Technology Rep. Stephen Lynch (MA-08), introduced the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act, which would protect consumers from the risks posed by emerging digital payment instruments, such as Facebook’s Libra and other Stablecoins currently offered in the market, by regulating their issuance and related commercial activities. Digital currencies, whose value is permanently pegged to or stabilized against a conventional currency like the dollar, pose new regulatory challenges while also represent a growing source of the market, liquidity, and credit risk.
The STABLE Act would remedy some of those challenges at a time when the COVID-19 Pandemic has exposed numerous barriers to accessing and utilizing mainstream financial institutions, leaving many to look to the financial technology sector to meet the financial servicing needs of low- and moderate-income (LMI) consumers for everything from faster direct payments, access to loans, and even access to bank accounts. LMI consumer vulnerabilities could be exploited and obscured by bad actors looking to issue stablecoins, like other shadow money issuers in the past. For Tlaib, García, and Lynch, that threat coupled with the financial strains posed by the ongoing pandemic requires urgent action, including passage of the STABLE Act that would:
Require any prospective issuer of a stablecoin to obtain a banking charter;
Require that any company offering stablecoin services must follow the appropriate banking regulations under the existing regulatory jurisdictions;
Require that any company or bank issuing a stablecoin to notify and obtain approval from the Fed, the FDIC, and the appropriate banking agency 6 months prior to its issuance and maintain an ongoing analysis of potential systemic impacts and risks;
And require that any stablecoin issuers obtain FDIC insurance or otherwise maintain reserves at the Federal Reserve to ensure that all stablecoins can be readily converted into United States dollars, on demand.
“Getting ahead of the curve on preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of color that traditional big banks have is—and has been—critically important,” Congresswoman Tlaib said. “From the OCC to the Federal Reserve to those peddling stablecoins, the protections the STABLE Act would make possible are more needed than ever amid a pandemic that will breed riskier financial decisions out of necessity because our federal government continues to fail us all by not providing adequate relief legislation. I thank Congressman García and Chairman Lynch for co-leading this important effort to see these protections made a reality.”
“Working class communities like mine in Chicago already face tremendous barriers to accessing financial services and credit. The Trump administration’s deregulation of our financial system has opened the door for tech companies to consolidate their power by preying on people of color with products that promise inclusion but only undermine our banking system,” said Congressman Jesús “Chuy” García. “That’s why I’m proud to introduce the STABLE Act with Reps. Tlaib and Lynch to ensure that new financial tools like stablecoins have proper oversight and protections. Congress must ensure that new financial technologies and payment tools do not prey on vulnerable users. The STABLE Act does just that--it embraces innovation while also protecting consumers.”
“The STABLE Act is a concrete step toward protecting Americans’ finances and ensuring safety and soundness in financial institutions,” Rep. Lynch said. “Stablecoins present a new and innovative way for consumers to use their money and I believe this technology can be used to make financial transactions more efficient while potentially increasing financial inclusion. However, adopting new technology has its risks and I give great credit to my colleague, Rep. Rashida Tlaib, for recognizing and addressing the need for appropriate consumer protections. In the STABLE Act Rep. Tlaib ensures that our financial regulators have the necessary tools to protect consumers. We cannot outsource the issuance of American currency to private entities and the STABLE Act guarantees that our regulators will be able to effectively oversee the application of this new technology.”
Facebook has attempted to take advantage of the financial exclusion and gap in the market—just one of the actors that have pursued issuing stablecoins by pegging them to a basket of major conventional currencies. JP Morgan, Apple, and Paypal/Venmo have also considered issue their own stablecoin variants that also have the potential to take advantage of unbanked and underbanked communities. Many of these stablecoins inherently represent a promise that, without regulations, there is potential for disparate impact, “predatory inclusion,” “digital redlining,” and the “color of surveillance,” as consumer advocates have warned.
Some of the foremost consumer advocacy organizations, including The Public Money Action, The Law and Political Economy (LPE) Project, Consumer Reports and Americans for Financial Reform, have endorsed the STABLE Act.
“The STABLE Act is a forward-looking bill that embraces digital payments innovation, while simultaneously ensuring that the our money remains safe, secure, and properly regulated,” Willamette University College of Law Assistant Professor Rohan Grey said.
"By extending federal banking regulation and consumer protections to cover new forms of ‘deposits’, the STABLE Act addresses the growth of ‘shadow payments’ and ‘shadow banking’—forms of financial activity that merit robust, preventative, and comprehensive regulation regardless of their specific legal and technological design,” Public Money Action Director and Yale Law School Associate Research Scholar Raúl Carrillo said. “Even more importantly, the STABLE Act shuts the door on Big Tech companies like Facebook that are trying to enter the banking space without following the appropriate rules or conducting business on a level playing field."
"The STABLE Act establishes appropriate oversight of issuers of stable coins," said Consumer Reports Manager of Financial Policy Christina Tetreault said. "It's an important step in establishing coherent federal oversight, supervision and regulation of digital financial instruments."
"Tech companies are promoting unregulated ‘stablecoins’ that compete with the U.S. dollar and regulated banks by promising customers they can't lose money on their investments,” Americans for Financial Reform Policy Director Marcus Stanley said. “These stablecoins are insured deposits in all but name. The STABLE Act would bring an end to this evasion by ensuring that companies that guarantee customer deposits are properly regulated as insured depository banks.”
“This is the first comprehensive attempt to offer regulatory clarity for the defense of the U.S. dollar in digital form, and places America among other world countries as a leader in digital assets.” said Value Technology Foundation President and CEO Jason Brett.
Tlaib and Lynch previously led a letter cosigned by García to the Acting Comptroller of the Currency (OCC) Brian Brooks blasting the bureau’s unilateral actions in the digital financial activities space, including interpretive letters on cryptocurrency custody, stablecoins, and its announced plans to start offering special purpose ‘payments’ charters, without protecting the financial system and consumers from the related increase in systemic risk.
A one-pager on the STABLE Act can be found here (link on page).
Hint: they can't, which is why decentralization is so important and why Ethereum and Vitalik have been trying to scale with decentralization not just get the highest TPS they can by adding in centralized methods.
I'd like to see them try to ban DAI, it's going to be like when the US have tried to ban just about everything else.
My history lessons back in grade school taught me about a time when they tried to ban alcohol. Ya'll remember how that worked out for them?
>My history lessons back in grade school taught me about a time when they tried to ban alcohol. Ya'll remember how that worked out for them?
It was 13 years of problems. That's an eternity in this space.