Amid growing scrutiny on stablecoins, regulators have become determined to carve out guidelines distinguishing stablecoins legislation from that of other cryptos. In the latest update, the US Senate Banking Committee has declared the timeline for upcoming hearing on Stablecoins regulation, dated December 14, 2021, i.e., coming Tuesday. The hearing is titled – “Stablecoins: How do they work, how are they used, and what are their risks?”, and will be held at the Dirksen Senate Office Building 538, along with streaming live on the senate’s website.
The lot of witnesses include, Alexis Goldstein, Director of Financial Policy at the Open Markets Institute, together with Professor Hilary J. Allen, American University Washington College of Law. However, according to the announcement published on the senate’s website, additional witnesses could potentially be added ahead of the hearing.
Stricter Regulation on Stablecoins Issuance
This hearing could nail down the ongoing debate around stablecoins. Although, it may not be the best news for the crypto community, given the US authorities long-standing argument on the risky nature of stablecoins. Last month, the U.S. Treasury Department published a report on the risks related to stablecoins, claiming that they threaten consumer protection and economic stability.
Especially, post the Tether fiasco, the Treasury Department’s report confirmed stricter regulations around stablecoins, enabling transparency in stablecoin reserve holdings. In according with the new laws, stablecoin issuance in the US will only be limited to insured depository institutions, which are subject to appropriate supervision and regulation.
“Stablecoins and stablecoin arrangements raise significant concerns from an investor protection and market integrity perspective…To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level…The legislation would prohibit other entities from issuing payment stablecoins.”
Japan’s Financial Services Agency (FSA) also followed in the US Treasury’s footsteps, in laying out new rules for stablecoins. Along with duplicating the issuance limitation law, the FSA also determined a rather stern AML regulatory approach, referring to illegal activities that utilise stablecoins.