With the number of stablecoins increasing significantly, and large-scale projects such as Facebook’s Libra bringing them front and center, the United States Congress may consider a bill to classify stablecoins as securities.
Stablecoins, as the name suggests, aim to be a more stable form of cryptocurrency, as their values are pegged to a fiat currency or other asset that is by nature, more stable than virtual currencies.
This Tuesday, Rep. Sylvia Garcia (D-Texas) published a draft bill that seeks to provide clarity regarding the nature of stablecoins. In particular, the bill introduces legislation to the House Financial Services Committee to regulate stablecoins under the Securities Act of 1933.
In particular, the bill states: “It is the sense of Congress that— (1) digital assets, known as managed stablecoins, are investment contracts and therefore are securities within the meaning given the term in section 2(a) of the Securities Act of 1933;
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“and (2) because issuers of managed stablecoins nevertheless maintain that managed stablecoins are not securities, it is appropriate for Congress to provide clarity by amending statutory definitions of the term security to include managed stablecoins.”
Response to Facebook?
The bill could be in response to Facebook’s stablecoin the Libra, which has attracted a significant amount of attention from US politicians since the whitepaper was revealed in June of this year.
“The market value of such digital asset is determined, in whole or in significant part, directly or indirectly, by reference to the value of a pool or basket of assets, including digital assets, held, designated, or managed by one or more persons,” the bill published today also states.
Should this bill be passed and signed into law, it would give the Securities and Exchange Commission (SEC) authority over all stablecoins, which would be a big step to creating clarity regarding the digital asset and, on the same hand, the future of Facebook’s project.
The future is unclear
However, it is important to point out that the introduction of the bill does not guarantee that the proposed rule will ever become law. Firstly, it needs to be voted out of committee, passed by the House of Representatives, moved up to the Senate and eventually signed into law by the US President.