The United States Congress is considering a bill that classifies and regulates stablecoins as investment contracts hence as securities.
Stablecoins are once again in the limelight. Based on reports, the U.S. Congress Rep for Texas’s 29th congressional district, Sylvia Garcia, filled a draft bill to the House Financial Services Committee.
Stablecoins are Securities Act of 2019
The bill plans to regulate stablecoins under the Securities Act of 1933. The draft bill by Sylvia Garcia, named ‘‘Stablecoins are Securities Act of 2019” is believed to be geared towards certain factors.
Among such factors, the bill provides clarity in areas that lack regulatory guidance.
The bill states: “The market value of such digital asset is determined, whole or in significant part, directly or indirectly, by reference to the value of a pool or basket of assets, including digital assets, held, designated, or managed by one or more persons.”
Besides, the bill involves changing the statutory definitions of the term security to include the term managed stablecoins.
A plot against Libra?
However, the step by the US Congress implies that the proposed bill seems to be directed at Facebook’s Libra stablecoin. The Libra project reportedly pegs a basket of fiat currencies to its stablecoin.
Till now, the proposed stablecoin face regulatory hurdles, lawmakers consistently place pressure on Facebook and its partners not to launch. Sadly, this led to the loss of top partners like Mastercard, Visa, eBay, PayPal, Mercado Pago, and Stripe. Although, Facebook released its formal council, elected Board of directors and an executive team.
Facebook CEO Mark Zuckerberg’s scheduled hearing before the committee comes up on Wednesday and makes things more interesting.
The bill could give the U.S. Securities and Exchange Commission (SEC) jurisdictional authority over stablecoins and also its issuers.
The bill states: “The Securities and Exchange Commission may issue rules and regulations defining the terms ‘‘managed stablecoin’’ and ‘‘digital asset’’ as such terms are defined in section 2(a) of the Securities Act of 1933.”
Although, the due process for the bill takes considerable time. As it needs to be voted out of committee, and passed by the House of Representatives. Then, approved by the Senate, before signed into law by the President.