Together with Congressmen Jesus García and Stephen Lynch, Michigan Democrat Rashida Tlaib today unveiled a new bill to shield buyers from risks associated with the rising US crypto-currency industry.
The goal of the bill is to make stablecoins unconstitutional without permission from local legislative agencies.
Regulating Stable Coins
The current law, called the “Stablecoin Tethering and Bank Licensing Enforcement” (STABLE) Act, allows the prospective issuer of a stablecoin to acquire Fed, Federal Deposit Insurance Corporation (FDIC) and related banking bodies permissions.
According to the official press release, without the written permission of the regulatory authorities, any individual engaged in the issuing of a stablecoin or related commodity would be deemed unlawful.
The proposed Act attempts to shield US customers from fraud surrounding cryptocurrencies and the threats associated with those ventures.
The bill requires that stable coin issuers are:
Required to receive a banking charter from every prospective issuer of a stablecoin;
Requires that every business providing stablecoin services, under current regulatory jurisdictions, shall comply with relevant banking regulations;
Require the notice and clearance of every corporation or bank issuing a stablecoin by the Fed, FDIC and the relevant banking agency 6 months prior to the issuance of the stablecoin and the continued review of the possible structural impacts and risks;
And encourage all stablecoin issuers to receive FDIC protection or otherwise hold Federal Reserve funds to guarantee that on requests, all stablecoins can be quickly translated into US dollars.
In the statement released, Tlaib targeted the Diem Project (Libra) of Facebook that is pegged to the US Dollar. Facebook has attempted to take advantage of a possible business void, the Michigan Democrat said, but there are also risks involved with the initiative.
Earlier in November, Tlaib and Lynch submitted a letter to the Acting Comptroller of the Currency (OCC) Brian Brooks denouncing unilateral behavior in the space of digital financial practices, including interpretive letters on custody of cryptocurrencies and safe coins.
In order to strengthen its organizational independence, the Libra Association, which manages Facebook’s cryptocurrency project, has decided to change its name to Diem Association in the face of regulatory backlash around the world.
The Diem Association (diem means day in Latin) will have its Diem Networks subsidiary to serve as the operator of the payment system.
The organization said its objective is still to build a secure, safe, and compliant payment system when making the name change.
“The Diem Association will continue to pursue a mission of building a safe, secure and compliant payment system that empowers people and businesses around the world,” the organization said late on Tuesday in a statement.
The move comes at a time when as early as January, the Libra Association is set to launch a single coin supported by one dollar, the media reported last week.
At a later date, the Libra Association will launch other currencies and a “digital composite” of all its coins.