Stablecoin Apocalypse: New Bill Threatens Crypto’s Very Existence

1. Draft bill proposes stablecoin moratorium
2. Bill follows UST and USDC incidents
3. Legislation seeks CBDC impact study

The House Financial Services Committee has unveiled a contentious draft of a groundbreaking stablecoin bill, stirring up debate on the future of cryptocurrency-backed stablecoins and the possible implementation of a central bank digital currency (CBDC).

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Available on the committee’s hearing page, this draft marks the first substantial cryptocurrency legislation introduced in 2023. The bill comes on the heels of two significant events concerning stablecoins over the past year: the collapse of terraUSD (UST), supported by the LUNA token, and the temporary destabilization of the second-largest stablecoin, USD Coin (USDC), from its $1 peg.

The proposed legislation establishes definitions for payment stablecoin issuers, a term that echoes former Senator Pat Toomey’s (R-Pa.) usage when he presented his own stablecoin bill in 2022. The draft bill aims to impose a moratorium on stablecoins like UST until a comprehensive study can be carried out.

Furthermore, the bill calls for an investigation into the potential consequences of a CBDC issued by the Federal Reserve, adding fuel to the ongoing debate around the advantages and drawbacks of central bank-issued digital currencies. This controversial proposal is poised to reshape the stablecoin landscape and impact the future of digital currencies in the United States.

In other news, in a potentially game-changing development, Representative Warren Davidson of the United States has announced intentions to introduce legislation that could force Securities and Exchange Commission (SEC) Chair Gary Gensler out of his position. In response to the SEC’s recent announcement regarding a reevaluation of the proposed redefinition of “exchange,” this action has been taken.

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