A bill in the U.S. House of Representatives would ban the creation and use of new algorithmic stablecoins domestically.
The bill would criminalize the creation or issuance of new “endogenously collateralized stablecoins,” Bloomberg reported.
Under the bill, existing providers of algorithmic stablecoins would have two years to change their digital asset collateral mechanisms.
Officials are citing the consequences of the TerraUSD (UST) collapse that happened earlier this year, arguing that this type of stablecoin would be the one to be prohibited in the market.
U.S. lawmakers included coins backed by the value of their own virtual asset into the list of algorithmic stablecoins. Stablecoins like Synthetix USD (SUSD) or BitUSD, which are fully backed by SNX and BTS assets, could fall under the bill.
The bill, which will be voted on next week, would require the U.S. Treasury Department to keep records of all new stablecoins and consult on approvals for such projects with:
- The Federal Reserve (Fed);
- The Office of the Comptroller of the Currency (OCC);
- The Federal Deposit Insurance Corporation (FDIC);
- The Securities and Exchange Commission (SEC).
The bill would also prohibit stablecoin issuers from commingling customer funds with company assets to protect consumers in bankruptcy cases.
Recently the U.S. government presented a concept for regulating the crypto market, one of the points of which was the fight against illicit financing. SEC Chairman Gary Gensler introduced a proposal to regulate Proof-of-Stake cryptocurrencies under the Securities Act.
