Beating up Blockchain: new Bill before US Congress
A new bill before the US Congress has ramped up the regulatory assault on blockchain with a group of representatives seeking to limit the creation of stablecoins to, in essence, banks only.
The Stablecoin Tethering and Banking Licence Enforcement Act (the STABLE Act ) - you have to hand it to the US, they really do legislative acronyms better than anyone - introduces a legislative definition of a stablecoin as:
any cryptocurrency or other privately-issued digital financial instrument that ... is ... distributed to investors, financial institutions or the general public... and ... is denominated in ... [a] national or state currency ... with the intent of establishing an... expectation... that [it] ... will retain a nominal redemption value that is ... stable.
Congresswoman Rashida Tlaib (a member of the so-called "The Squad") has cloaked the bill in the language of consumer protection, joining with Rep. Stephen Lynch, Chair of the US Congress Task force on FinTech to push the Bill and saying it would:
would protect consumers from the risks posed by emerging digital payment instruments, such as Facebook’s Libra and other Stablecoins currently offered in the market, by regulating their issuance and related commercial activities
Specifically, the Congresswoman is concerned about a "repeat" of "crimes" by "big banks" occurring in the digital currency space:
Twitter users have quickly responded, pointing out the hypocrisy in seeking to limit stablecoins to those very banks the Congresswoman is beating up in her tweet and noting there is an absence of any concrete risks identified by the Congresswoman and that the very banks who the Congresswoman seeks to make gatekeepers of stablecoins have a very checkered history of consumer protection.
It's difficult not to see this Bill, and the specific naming of Libra, as an attempt to prevent the Libra (now Diem) project from gaining power as a payment platform independent from banks. As well Visa has just announced a partnership with USDC to integrate payment systems globally.
When COVID-19 stimulus was debated before the US Congress the stimulus bill initially contained a framework for a Central Bank Digital Currency for the US to send cash out quickly, but this was scrubbed from the Bill before it passed.
Given the Republican hostility to The Squad in particular, it would be difficult to see this Bill pass the US Senate, but the fact that politicians are taking shots at the rapidly emerging innovation in the digital currency space is causing many to sit up and take notice.
It is with a raised eyebrow we compare the US position, decrying consumer protection around stablecoins, while across the Pacific, the casino Mecca of Macau is seeing a flight of customers, with a pending introduction of a central bank issued stablecoin (with attendant tracking of funds) being cited as a reason for the desertion of business from the casinos.
Australia's approach of regulating activities, not technology, means we are unlikely to see stablecoin specific legislation being introduced down under.