The CEO of stablecoin business Circle, Jeremy Allaire, is dubious about the likelihood that the lately advanced Clarity for Payment Stablecoins Act would become legislation. The lack of clarity on important topics in the bill, which Allaire believes has to be addressed, is what led him to form this opinion that the stablecoin bill is unlikely to be signed.
Although there has been agreement on the necessity for stablecoin control in the nation, Allaire said on Laura Shin’s cryptocurrency podcast Unchained that he doesn’t believe this legislation would be passed. A stablecoin bill was one of the handful of pieces of cryptocurrency-specific legislation that the U.S. digital traders anticipated to see in 2022. However, It appears that this bill won’t be finished in time for senators to discuss and approve it as law this year.
Federal Reserve as an Impediment
Commenting on the prediction that the Stablecoin Bill is unlikely to be signed into law, Jeremy Allaire has given this reason: “A lot of this has to do with how much of a role the Federal Reserve plays in not setting the standards … does the Fed get to veto who receives a stablecoin license?”
Thus, the presence of the Federal Reserve in stablecoin matters is another issue that Allaire thinks would slow down or perhaps block the passage of the Clarity for Payment Stablecoins Act. He declared about this issue, “Does the Fed have any supervision if a state like New York issues a stablecoin charter to someone — does the Fed have any joint or supervisory role? It’s kind of technocratic but it is important stuff that has to do with state rights and federal rights and the balance of power.”
According to Allaire, the Federal Reserve may or may not have authorities relating to state-issued licenses for stablecoin enterprises. While being very detailed about risk, reserves, and transparency management, Allaire emphasized a number of the act’s benefits, claiming that its ratification would create an easy-to-follow process for bank and non-bank stablecoin issuers.
According to Allaire, the Clarity for Payment Stablecoins Act would appropriately put into place the much-needed assurance of law that a dollar stablecoin is and shall remain an element of the American and global financial systems – opening the door to widespread public adoption of these instruments.
The stablecoin bill has to overcome real hurdles to become a law. Most experts noted that regardless of original plans that intended to publish a draft of the bill beginning as early as the concerned week, a legislative drive toward the crypto industry’s first major set of U.S. regulations remained stalled over conciliations between the panel’s Democratic chairwoman Maxine Waters and its senior Republican Patrick McHenry, according to a trio of persons intimately acquainted with the talks. There have been a variety of issues to resolve, including complex issues like the function of state regulators, the potential for an American digital dollar, and the handling of user funds stored by cryptocurrency platforms.
In terms of crypto regulation, stablecoins may be the most probable sector to come under genuine government regulations – notwithstanding the Stablecoin Bill is unlikely to be signed into an Act, as observed by many. The sector has for a long time been urging Congress to begin establishing federal control of cryptocurrency. The tragic fall of Terra-Luna in May put the lack of regulations in stablecoins – digital tokens intended to preserve consistent value by being connected to assets like the U.S. dollar – on full view and provided important lawmakers with a topic of discussion.
Any potential legislation will likely cover topics like how stablecoin issuers can use banking services, how their reserves must appear, whether they can use fractional reserves, what type of license stablecoin issuers require, and what type of consumer safeguards must be built in.
Also Read: Crypto firms cannot claim to be banks says Hong Kong SFC.
