In the letter
- The STABLE Act would require stable coin issuers to meet the same regulatory requirements as banks.
- It was proposed by representatives Rashida Tlaib, Jesús “Chuy” García and Stephen Lynch.
- It was not assigned to any committee.
A trio of Democratic lawmakers have tabled a bill to regulate stable coins, including Facebook’s Diem (formerly Libra).
Congresswoman Rashida Tlaib announced this along with MP Jesús “Chuy” García and MP Stephen Lynch Law on the Enforcement of Stablecoin Tethering and Banking Licenses (STABLE).
The STABLE Act, as written, would require stable coin issuers to have a banking charter and obtain regulatory approval from the Federal Reserve, FDIC, and other agencies before issuing this coin. You must also be FDIC insured or hold an equivalent number of dollars with the Federal Reserve.
That is a high threshold.
Even the so-called “crypto banks” that have earned bank certificates in Wyoming – Kraken Financial and Avanti – go through processes at the state level that are not regulated by the office of the currency auditor like the national banks. Additionally, the FDIC does not currently allow insurance for crypto assets.
While the press release notes that the “COVID-19 pandemic has uncovered numerous barriers to access and use of mainstream financial institutions,” it is clear to the writers that they do not want bad actors to see low and middle income Americans exploit . It specifically names “shadow banks” – financial firms that are not regulated as banks but can issue loans and other products.
Representative Lynch noted, “Stablecoins are a new and innovative way for consumers to use their money, and I believe this technology can be used to make financial transactions more efficient while increasing financial inclusion.”
But Lynch and his colleagues want to be wrong on the regulatory side – so that cryptocurrency providers don’t become too much like banks.
“It is crucial that cryptocurrency providers are prevented from repeating the crimes against low and middle income residents that traditional big banks have committed,” said Rep. Tlaib.
Rep. García took on an equally cautious tone: “The deregulation of our financial system by the Trump administration has opened the door for tech companies to consolidate their power by chasing people with colors with products that promise inclusion but only undermine our banking system . “
The STABLE Act has not yet been assigned to the committee, although Rep. Lynch chairs the Financial Technology Task Force.