On June 17, the US Senate voted to approve a regulatory regime for Stablecoins.
This vote represents one of the most important steps in cryptocurrency since the pseudonym author Satoshi Nakamoto white paper announcing the creation of a new digital private currency called “Bitcoin” 16 years ago.
By a vote of 68-30, the Senate pass The law of guide and establishment of national innovation for the Stablescoins Act (Genius Act). It will become the law when the Chamber will adopt this bill – or adopt a similar bill with differences calculated in a conference committee of the house – and President Trump signs the legislation.
For those who believe in the potential of private cryptocurrency rather than a digital currency of the Central Bank managed by the State (CBDC), the adoption of the bill always offers certain things to celebrate. A supermajority of the Senate, comprising almost all Republicans and a large number of democrats, rejected the attacks by Gercrypto in general such as Senator Elizabeth Warren, D-MASS., And recognized the potential of digital assets emitted to allow faster payments with less transaction costs.
This vote also reveals that many legislators and Trump administration civil servants Recognize the stablecoins of private transmitters as one of the most effective ways to strengthen the US dollar. This represents the progress of only a few years There is When CBDCs were often discussed as the only way to make the dollar competitive.
My organization, the Business Competition Institute (CEI), has long opposite CBDC managed by the government, and we have underlined the many concerns about confidentiality and spice for private financial services. We defended private sector innovations as Stablecoins as best solution for any problem of Payment system.
However, while the adoption of the law on engineering can be considered positively as recognition of the potential of the crypto, many unnecessary restrictions were put On the emission of Stablecoins that could hinder innovation in industry and reduce choices and benefits for ordinary American consumers and small businesses.
Government Has a role in the prevention of fraud on the markets of stablescoin – as it does on all markets – and there is therefore a justification for rules such as those requiring the disclosure of the reserve assets of a stablecoin.
However, certain provisions of the Act on Engineering are not linked to the prevention of fraud or deception, And instead give Regulators can unjustify powers, limit choices and protect traditional finance competition institutions. These provisions must be rejected or modified as the legislation is debated in the House.
Here are some of the worse provisions of the bill which must be amended in the legislation of the chamber.
- The expansion of the “Customer Knowledge” requirements (KYC) of the Bank Secrecy Act (KYC) for “suspicious activity reports”. Designating stablecoin issuers as “financial institutions”, the law on engineering brand them subject at the same thing Strict requirements as banks under the Bank Secrecy Act (BSA), which was intended for struggle money laundering. Again as Part of the BSA compliance tasks, banks and other financial institutions are required to submit reports on many legitimate customer transactions which exceed a certain threshold of a certain dollar or correspond to the subjective criteria of being a “suspicious activity” to simply deviate from the standard. Like my colleague Cei iain Murray recently written In the daily economy: “The banking regulations transform this principle on its head – all are suspect, and your bank must work on this principle. This is what KYC means. ” BSA KYC mandates have aroused criticism from people from many political angles, including the Union of American Civil Liberties. The innocent guilty and proven mentality integrated into KYC should not be exported to the world of cryptography.
- Prohibition of stables -for interest – or yield – on stablecoins by the clears. A lot of stablecoins today such Like the circle USDC allow staking – in which holders of these stablecoins can see their holding company Multiply because more stablescoins are created. However, this method of wealth creation would now be reduced, as stablecoins cannot pay interest or yield under the engineering law. CEO of Coinbase, Brian Armstrong, rightly said“Stablecoins should be able to pay interest as an ordinary savings account.” The provision seems to be more concerning the protection of banks against competition has their deposit accounts that any concern about financial stability. It must be removed from any final legislation.
- Restrictions on non -financial companies directly issuing stablescoins. As I have it Previously writtenthe United States is practically the only developed country which prohibits non -financial Companies of the entry into the banking services. In the United Kingdom, the superstore Tesco has an affiliated bank which is one of the largest in the country, and walmart was able to open banks in Mexico and Canada, but not in its country of origin. The “separation of banks and the justification of trade” is a shiboboleth created in the United States to protect the banks established against baseless competition in terms of security and solidity.
These restrictions have unfortunately been postponed to the law on engineering. Although the bill does not fortunately prohibit all had proposedIt prohibits large non -financial companies from becoming direct stable issuers. This means some of the most innovative companies in technology and retail won’t be able To bring their innovations to this market.
As Norbert Michel, director of the Center for Monetary and Financial Alternatives of the Cato Institute, underlines In Forbes, this provision of the bill is “a restriction harmful to competition, that which does not create a neutral regulatory environment Or Create a level playground for transmitters. »»
Free market fixes to these provisions are necessary Before the final passage to ensure that the United States leads to cryptocurrency innovation and that all Americans can benefit from crypto potential.
Harrison Cerone, research partner with the Competitive Enterprise Institute, contributed to this position.
John Berlau is principal researcher at the Competitive Enterprise Institute and author of “George Washington: Entrepreneur: how the private activities of our founding father changed America and the world. “Read John Berlau’s reports – More here.
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