November 28, 2022

New Bloomberg Report He mentioned that the upcoming legislation will ban stablecoins like TerraUSD which crashed in May this year which led to the global crash of cryptocurrencies.

The said bill is currently being drafted in the US House of Representatives.

Master the Stablecoin chip

The bill would make it illegal to develop or issue “internally secured fixed currencies.” Such a stablecoin is pegged to a related cryptocurrency from the same originator in order to maintain a stable price.

The token is sold with the suggestion that it can be transferred, transferred or redeemed at a fixed price.

In the event of a breach, the issuer will be given a two-year period to reconfigure its operating model and guarantee its coins differently.

It was the collapse of the stablecoin TerraUSD, pegged to the original cryptocurrency called Luna, that led to the crypto crash in May this year.

Singapore-based crypto hedge fund Three Arrows Capital has gone bankrupt due to exposure to these stablecoins.

The bloodbath that followed did not spare the other players in the market either. Several cryptocurrency exchanges such as Zipmex, Voyager, and Vauld also collapsed during this period.

The bill also provides for a study of stablecoins like TerraUSD by the Treasury Department, along with the Federal Reserve, and The Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (OCC).

The bill also allows banks and non-banks to issue new stable currencies after due process. While banks will need to obtain approval from federal regulatory agencies such as the OCC, non-bank banks will need to follow a process that will be determined by the Federal Reserve.

In addition, the bill would also restrict monetary institutions from mixing consumer assets such as cash, stablecoins, and private keys with their own corporate assets.

Encryption issues become critical

A KPMG Report A publication published earlier this month said that companies looking for low-risk investments are likely to show more interest in the less volatile virtual asset class than stablecoins.

The report stated that the committee is likely to vote on the bill as soon as next week, but no date has been set yet. With the upcoming midterm elections, it is imperative that members urgently address critical economic issues such as cryptocurrency.

However, as the discussion continues, the final form of the bill may vary widely.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *