US senators seek to make stablecoins illegitimate

  • Three US congress representatives have introduced a new bill regarding stablecoin to the other members
  • The bill has no chance of becoming a law
  • The whole crypto community is against the bill

A new bill was introduced to the members of the US Congress regarding stablecoins by three members. Congresswoman Rashida Tlaib sponsored the bill on Thursday, and Jesus Chuy Garcia and Stephen Lynch were the co-sponsor of the stablecoin related bill. The bill seeks to gain absolute control of stablecoins. However, the crypto community has reacted strongly to the proposed bill without receiving approvals from federal bodies.

Is there any chance for the bill to become law?

As the end of the 116th US Congress is on 3rd January 2021, every bill that has not become law will also end with the Congress. Still, the crypto community has a lot of time to kick the hornet’s nest. As the bill will require any firm issuing such coins should have a banking charter and approval of FDIC and Federal Reserve, which means no small feat for virtual currency firms. It is observed that the bill has no chance of becoming law, as the bill directly aims at stablecoin firms, including Tether and the social media giant Facebook. 

The bill would be the opposite of what is proposed for

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The bill is proposed for protecting lower and moderate-income users who found them to be locked out of the traditional banking system. Rashida pressed the case for regulators preventing crypto firms from adopting the lousy habit of big banks and other scaling populations. 

Meltem Demirors, chief strategy officer at CoinShares, mentioned through a tweet that the bill would show an opposite effect. According to Demirors, digital currencies help lower the cost of servicing populations excluded by the traditional banking system, and raising cost and compliance obligations on cryptocurrencies will force such firms to cut the access for unprofitable users.

The bill will have a massive effect on crypto innovations

Jeremy Allaire, CEO of Circle, mentioned in a tweet that the bill related to stablecoins would represent a huge step backward for virtual currency innovation in the country. The bill will limit the accelerating progress of both the financial technology and blockchain sector. Rohan Grey, assistant professor at William University College of Law, added to Allaire’s tweet and mentioned that as the bill’s sponsors claim that they want to provide industry players what they want, they ignore that the banking history has a moral position.

However, a young trainee in the XRP army tweeted that, according to them, passing the bill is not a bad idea, it will hold the stablecoin issuers accountable for their reserves so that they would maintain $1 for each issued dollar-pegged stablecoin. Indeed, it doesn’t seem that the bill will be talked about beyond one week.

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Ritika Sharma
Ritika Kumari Sharma is an Economics Honors graduate from the University of Calcutta. She is completely into finance and believes that cryptocurrencies are the future. She is an enthusiast learner about the cryptocurrency and blockchain technology.

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