A new draft bill has been introduced in the United States House of Representatives which provides a regulatory framework for stablecoins. The bill puts non-bank stablecoin issuers, such as Tether and Circle, under the oversight of the Federal Reserve. If one fails to register as a stablecoin issuer, they could face imprisonment for up to five years and a fine of $1 million.. The bill requires insured depository institutions to fall under the supervision of the appropriate federal banking agency, while non-bank institutions would be subject to Federal Reserve oversight. In order for applicants to gain approval, they need to exhibit technical proficiency and established governance, along with demonstrating the advantages of providing financial inclusion and innovation through stablecoins, while also maintaining reserves supported by either U.S. dollars or Federal Reserve notes.
Included in the draft are provisions for a two-year prohibition on the issuance of stablecoins that are not supported by physical assets, as well as a mandate for the U.S. Department of the Treasury to investigate stablecoins that are collateralized from within.. Additionally, the bill allows the U.S. government to establish standards for interoperability between stablecoins and requires Congress and the White House to support a Federal Reserve study on issuing a digital dollar.