Draft legislation in the U.S. House of Representatives would impose a two-year ban on new algorithmic stablecoins like TerraClassicUSD (USTC), which de-pegged from the U.S. dollar earlier this year, leading to widespread crypto market contagion.
According to the Bloomberg.
However, the legislation provides a two-year grace period for existing algorithmic stablecoin providers to change their models and collateralize their products differently.
The definition would reportedly cover stablecoins that rely on the value of another virtual asset from the same creator to maintain their price and are marketed as having the ability to convert, buy back, or otherwise redeem for a fixed price.
the bill proposes worry Regarding the definition of whether to include stablecoins such as Synthetix USD (SUSD), as it is currently collateralized by the native asset of the same protocol in the SNX token. Other algorithmic stablecoins with similar structures include BitUSD backed by BitShares (BTS).
Those who are well educated in crypto understand that Terra does not represent all stablecoins, Celsius is not DeFi, 3AC has nothing to do with technology, etc.
But as with everything, dealing with these nuances is a lot harder than simply saying “crypto is bad, regulate it to death”.
— Jake Chervinsky (@jchervinsky) September 19, 2022
The draft bill also requires the U.S. Treasury Department to conduct research on algorithmic stablecoins and consult with the Federal Reserve, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.
The panel could vote on the bill as early as next week, and Democrats Maxine Waters and Republican Patrick McHenry have been working to reach a deal on the bill, people familiar with the matter said, though it was unclear whether McHenry approved it. latest bill. draft.
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Waters, who chairs the House Financial Services Committee, of which McHenry is a senior member, both heard testimony at Tuesday’s hearing that dollar-backed stablecoins can enhance national security because of the dollar’s prestige and reliability.
TerraClassicUSD (USTC), formerly TerraUSD (UST), is an algorithmic stablecoin that lost its 1:1 peg to the U.S. dollar in early May and hit an all-time low of $0.006 in mid-June, resulting in tens of billions of dollars in lost value.