Gottheimer Announces “Stablecoin Innovation and Protection Act,” Critical New Cryptocurrency Legislation  

ISSUE: Gotheimer Announces Stablecoin Innovation and Protection Act, Critical New Cryptocurrency Legislation

Encourages innovation in the United States

Helps protect Americans from bad actors, predators, terrorist financing

Support from the Blockchain Association

WASHINGTON, DISTRICT OF COLOMBIA – Today, February 15, 2022, US Congressman Josh Gothimer (NJ-5) published a discussion of the 2022 Stablecoin Innovation and Protection Bill, legislation aimed at identifying qualified stablecoins, nominating qualified stablecoins from more volatile and unstable cryptocurrencies. consumers and investors. The law will help reduce the risk of financial market instability, protect consumers and support current innovations in US technology

Legislation defines qualified stablecoins as a cryptocurrency that can be redeemed on demand on a one-to-one basis in U.S. dollars and issued by one of two qualified issuers, either an insured depository institution such as a bank or a non-bank qualified stablecoin issuer. The bill will help protect against systemic risks, fraud and illegal funding.

The legislation gives the Office of the Currency Controller (OCC) the primary authority to oversee both types of stablecoin issuers. To help further protect consumers, the Federal Deposit Insurance Corporation (FDIC) will need to develop a Stablecoin Qualified Insurance Fund to manage the redemption insurance of non-bank issuers.

“The expansion of cryptocurrency offers tremendous potential value to our economy. But for cryptocurrency to grow and thrive here in the United States, not overseas, we need to provide more direction and market confidence to help boost innovation and protect consumers. ” said Congressman Josh Gotheimer (NJ-5), a member of the House Financial Services Committee. “That’s why I’m issuing the Stablecoin Innovation and Protection Act to encourage cryptocurrency innovation in the United States, identify qualified stablecoins, and protect Americans from bad entities such as predators and terrorists. We should not stifle innovation in the cryptocurrency market. We need to provide proper guarantees and make sure that our country is a leading force in financial technology. “

The Stablecoin Innovation and Protection Act of 2022 includes the following provisions:

  1. Require all qualified stablecoins to be issued by a bank or non-bank qualified stablecoin issuer.
    1. A non-bank issuer must maintain at least 100% of the reserve assets consisting of US dollars, securities issued by the US government, such as US Treasury securities, and other assets deemed necessary by the Office of the Currency Controller (OCC).
    2. The funds must be kept in a separate account insured by the Federal Deposit Insurance Corporation (FDIC).
  1. Identify qualified stablecoins as a cryptocurrency that can be repaid on demand on a one-to-one basis for US dollars and issued by one of the two qualified issuers.
    1. A qualified stablecoin is not defined as a security or derivative.
  1. Provide OCC with primary oversight powers for both types of stablecoin issuers and, in coordination with any other necessary agencies, is required to issue regulations on issues such as leverage ratios, audit requirements, anti-money laundering / compliance with “know your customer” requirements, repayment requirements, liability management standards and interaction.
    1. The FDIC will need to develop a Stablecoin Qualified Insurance Fund to manage the redemption insurance of non-bank issuers.

  1. Does not restrict the issuance of other types of cryptocurrencies. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are also not limited to treating unqualified stablecoins and other cryptocurrencies as potentially securities and derivatives.

The discussed draft text of the Stablecoin Innovation and Protection Act can be found here.

“Rep. Gotheimer’s bill is the most complete and well-thought-out stablecoin law we’ve seen to date. “ said Christine Smith, executive director of the Blockchain Association. “We are pleased that Congress is taking an active approach by engaging with industry and government stakeholders as they see the best way to regulate stablecoins. We thank the representative of Gottheimer for his leadership in this area and look forward to continuing to work with him on these issues. “

“We applaud the leadership of the Gotheimer Representative, who has taken a thoughtful risk-based approach to stablecoin innovation in the U.S. and how they can fit into federal regulatory frameworks. Supporting banking and non-banking innovation in the payment system is key to long-term competitiveness and ample opportunities for how dollars move in the 21st century. ” Said Dante DiParte, chief strategy officer and head of Circle’s global policy department.

“The Digital Chamber of Commerce appreciates Gottheimer’s active consultation with the industry and looks forward to continuing to work with Mr Gotheimer as well as other members to work on an appropriate regulatory framework that provides adequate safeguards, maintains innovation, and provides a level playing field. , and for new entrants in this emerging market, ” said Theana Baker Taylor, chief digital officer of the Chamber of Commerce.

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