To regulate the expansion of stablecoin, two U.S lawmakers, Rep. Trey Hollingsworth (R-Indiana) and Sen. Bill Hagerty (R-Tenn.) proposed a bill in the Senate and House. The bill aims to bring greater transparency to the stablecoin market.
The bill called the “Stablecoin Transparency Act” would force stablecoin issuers to report on their reserves to financial authorities as well as set a standard bar for the “quality of assets held in reserves”.
If the Senate passes the bill, it would create major influence over stablecoin issuers such as Circle, Maker, and Tether. These major stablecoin issuers have great dominance in the market.
Its been also a hot topic for stablecoin issuers regarding their stablecoin’s reserve privacy.
“This bill isn’t going to solve everything,” Hollingsworth said in an interview “But it is an incremental step towards the unveiling of a balanced approach between development, technology, and protection of consumers.
Hollingsworth stated that he’s been amazed by the immersive support for the proposed bill from fellow lawmakers and industry participants. “Even in its infancy of being introduced, we’ve just seen tremendous support on how this is a really thoughtful first step,” he said.
He believes that the bill would provide a vision for issuers to guess a Congress stance over stablecoin regulation.
“Even presenting this and dropping this to Congress is a signal to industry where we are headed,” Hollingsworth stated. “They can begin to make decisions and move in that same direction.”
The purpose behind the bill is to flush out bad actors from stablecoin issuers and ensure only “good actors”, who wish to comply with regulations. The bill would also provide guidelines for stablecoin players to make decisions about investments, regulations, and how to continue to develop the technology.
“Good actors in the space want to see the bad actors removed from the space, precluded from acting in the space so that one bad actor will not besmirch the good reputation and good efforts of the entire industry,” he said.
As most Stablecoins are egged with U.S dollars, Hollingsworth realized that it is important to prepare a bill that can also cover other stablecoins that don’t peg with dollars.
We’re working as broadly as possible with industry and consumers globally to make sure we’re coming out with a thoughtful framework,” Hollingsworth said. “That’s one of the reasons, frankly, why the bill isn’t dollar-specific.”
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