A bill by the United States House of Representatives would block the circulation of crypto markets denominated in the US dollar for two years by new algorithmically stable coins such as TerraClassicUSD (USTC) earlier this year.
According to a draft of the bill obtained by Bloomberg, the law would make it a crime to create or issue new “de facto stablecoins.”
However, the law includes a two-year grace period for existing algorithmic stablecoin providers to change their models and handle their offerings differently.
Meaning that a stable coin is based on another virtual value from the same creator that can be marketed with the ability to maintain its value and change, buy or otherwise redeem at a fixed price.
The bill goes up. Concerns Stablecoins such as Synthetix USD (SUSD) are collateralized by definition as they are collateralized with the same protocol native property in the SNX token. Other algo-stablecoins with a similar structure include BitUSD backed by BitShares (BTS).
People well-educated in crypto say that Terra does not represent all stablecoins, that Celsius is not Defy, that 3AC has nothing to do with the technology, etc.
But as with everything, dealing with those obstacles is harder than simply saying “crypto is bad, regulate it to death.”
— Jake Chervinsky (@jchervinsky) September 19, 2022
The draft bill would require the US Treasury to conduct a study on algorithmically stable coins and consult with the Federal Reserve, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.
The panel is likely to vote on the bill as early as next week, according to Bloomberg, who said Democratic Rep. Maxine Waters and Republican Patrick McHenry were working to reach an agreement on the bill, although McHenry is not known to have approved the latest draft.
Related: The crypto industry can trust Cynthia Lammis to get the regulation right.
Waters chairs the House Financial Services Committee, of which McHenry is the ranking member, and both heard testimony in Tuesday’s hearing that stable coins backed by the U.S. dollar could enhance the dollar’s prestige and reliability.
TerraClassicUSD (USTC), the algorithmically stable coin formerly known as TerraUSD (UST), lost its 1:1 peg to the US dollar in early May, resulting in tens of billions of dollars in losses by mid-June at a low of $0.006. Cost of loss.