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This week, crypto news is focusing on Congress, which is in the last week of its August recess. Policymakers are starting to descend on the Capital once again and, as has been the trend this year, crypto is one of their biggest topics of discussion. Several bills have cropped up in recent months, although none have seemed closer to an actual vote than one particular stablecoin bill. As it’s shaping up, however, even this piece of legislature could be doomed as a result of poor communication.
Some legislators have become very interested in crypto lately — and how to regulate the industry. Of course, early bills have already cropped up with some preliminary calls to action. Until earlier this year, however, these efforts weren’t taken as seriously. That is until President Joe Biden signed his executive order on cryptocurrency.
This summer, investors have seen some real progress on the crypto front. The most notable legislation is Senators Cynthia Lummis and Kirsten Gillibrand’s bipartisan bill to regulate the market. This piece of legislation is fueling a debate over whether to give the Commodity Futures Trading Commission (CFTC) or the U.S. Securities & Exchange Commission (SEC) greater regulatory power.
While that bill seems to stagnate, though, lawmakers are also taking interest in stablecoins. This is largely because of the scrutiny the stablecoin market has come under in the wake of the May collapse of the Terra (LUNC-USD) crypto network and its stablecoin. At the time, Terra’s native stablecoin and several others de-pegged, causing widespread panic among holders.
Crypto News: Stablecoin Bill Looks Likely to Fizzle Out
The influx of bearish crypto news is pushing Congress to produce legislature which better protects investors. However, as it is turns out, at least one of two notable stablecoin bills will likely wilt in-committee.
One of these bills, drafted by Senator Pat Toomey, would force stablecoin providers to be transparent with their reserves. Currently, providers aren’t required to disclose the assets that underlie and preserve their coins’ pegged values. As such, they might opt to fill these reserves with an assortment of assets. This bill would influence companies to keep only strong reserve assets like USD rather than commercial paper.
Another bill, from House members Maxine Waters and Patrick McHenry, seeks similar ends. The bill would require the value of reserve assets to be held at a 1-to-1 ratio with stablecoin supplies. This is another thing companies are not legally required to do. Many don’t — especially controversial algorithmic stablecoins.
The August recess for Congress has proven to be good for Toomey’s bill as he seeks out bipartisan support to strengthen its likelihood of passage. But Waters and McHenry’s bill is another story. These members were hoping to get their bill to a vote before the recess. That didn’t happen.
Now, experts say the likelihood that the bill sees passage — or even a vote at all — is down drastically. This being a midterms year, many members of Congress are shifting focus toward reelection. These members are thus going after bigger issues. Whispers suggest the bill could see a committee vote in mid-September. But if it slips through the cracks, investors may have to wait until 2023 — during the next Congressional session — to see any headway.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.