New Bill to Make Stablecoin Trading Transparent
A new bill is making its way through the United States Congress that would increase transparency in the Stablecoin market.
The proposed bill, called the Stablecoin Transparency and Accountability Act, would require all Stablecoin exchanges to register with the US government and adhere to strict regulations.
Supporters of the bill argue that it is necessary to protect consumers from fraudulent or abusive practices by Stablecoin exchanges.
They also argue that greater transparency will help to ensure that Stablecoins remain a reliable and stable investment option.
Critics of the bill argue that it will impose excessive regulations on Stablecoin exchanges, harming innovation in this growing sector.
Rep. Trey Hollingsworth (Al Drago/Bloomberg via Getty Images)
The controversial bill, if passed, would have a huge influence on stablecoin creators such as Circle and Tether, whose currencies’ backing has been the source of a lot of debate in the cryptocurrency sector.
The Stablecoin market has been growing rapidly in recent months, with a number of issuers entering the market.
Stablecoins are cryptocurrencies that are pegged to traditional currencies like the US dollar or Euro, and thus provide a more stable investment option than other cryptocurrencies like Bitcoin.
However, the Stablecoin market has come under scrutiny in recent weeks, as questions have been raised about the backing of some of the largest Stablecoin issuers, Circle and Tether.
In particular, critics have alleged that Tether may not have the fiat currency reserves to back up all of its tokens.
Now, lawmakers in the US Congress are looking to introduce legislation that would increase transparency in the Stablecoin market.
“This bill isn’t going to solve everything,” said Rep. Hollingsworth. “But it is a small step towards the creation of a fair balance between development, technology, and protection of customers.”
The proposed bill, which is still in its early stages, would require Stablecoin issuers to disclose their reserve holdings on a regular basis.
In addition, it would mandate that Stablecoin exchanges be registered with the SEC and comply with anti-money laundering (AML) and know your customer (KYC) requirements.
“This is a good step forward, but I think we need to go further,” said Rep. Darren Soto, one of the sponsors of the bill.
“We need to make sure that consumers are protected when they invest in Stablecoins, and that they can trust that these currencies are backed by real assets.”
Hollingsworth is concerned that too many “bad actors” in the stablecoin industry those who are simply interested in regulatory compliance – may be able to take advantage of the confusion and seize an opportunity to exploit it.
“This bill is about bringing certainty to an industry that is still in its early stages,” said Hollingsworth.
“Stablecoins are a new and innovative technology, and we need to make sure that we provide a clear path forward for those who want to comply with the law.
At the same time, we need to make sure that consumers are protected and that bad actors can’t take advantage of them.”
The Stablecoin Transparency Act would require all entities dealing in Stablecoins to disclose their identities, as well as any financial information related to their Stablecoin holdings.
It would also impose AML and KYC requirements on all Stablecoin transactions, ensuring that investors can trust.
“We’re working as widely as possible with the industry and the public worldwide to ensure we come out with a well-considered framework,” added Hollingsworth. “That’s one of the reasons why, candidly, the bill isn’t dollar-specific. The Stablecoin market is global, and we want to make sure whatever regulatory system we implement is technology-agnostic.”
The Stablecoin Transparency Act has the support of both industry groups and consumer advocates.
“This bill is a common sense step forward to protect consumers who are interested in stablecoins,” said John Berlau, senior fellow at the Competitive Enterprise Institute.
“By ensuring transparency and disclosure requirements for Stablecoin holders, bad actors can be rooted out and consumers are protected from price manipulation and other abuses.”