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Stablecoin bill: expert reaction varies from ‘benefit the digital token economy’ to ‘stifle innovation’

By:
on Apr 18, 2023
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  • Expert reaction to the US stablecoin bill is mixed.
  • Some argue the stablecoin bill will bring much needed clarity to the sector.
  • Others argue there is 'very, very little' in the bill that offers protection to users.

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Stablecoin regulation in the US could require stablecoin providers to maintain reserves that would back their coin on “at least one-to-one basis.” While major stablecoin entities like Tether (USDT) and USD Coin (USDC) already abide by this guideline, those that don’t risk a $1 million fee or up to five years in prison.

The bill also includes discussions on a pause on new stablecoins that are backed by other cryptocurrencies. It also includes a discussion on central bank digital currencies.

Naturally, expert reaction to a potential step forward in the regulatory space is mixed.

Tether: Stabelcoin bill ‘will benefit the digital token economy’

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Tether, perhaps the most well known stablecoin and third largest cryptocurrency by market cap, said in a statement that a bill could provide “much-needed clarity” for fintech and other institutions looking to enter the crypto space.

Regulatory authorities should “articulate the larger goal of modernizing our payments system,” the statement added. If such is the case, improved regulatory clarity “will benefit the digital token economy.”

Stefan Rust: lawmakers need to ‘refocus its attention’

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Truflation CEO Stefan Rust said in a statement that US lawmakers are framing the cryptocurrency bill as a consumer protection effort. However, there is “very, very little” in the bill that provides superior protection to users. 

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Instead, it will merely “stifle innovation” by guaranteeing existing financial powerhouses keep “power and wealth concentrated” and ensure “tax collectors keep collecting,” Rust added

It seems “clear” that lawmakers in the US and elsewhere in the world are “coming for crypto” as stablecoins represent a potential threat to the US dollar and Euro dominance. He writes:

As both the US and the EU are spending innumerable hours on legislating against an innovative sector that as yet accounts for only a fraction of the market value of gold, though, the BRICs nations (Brazil, Russia, India, and China) are looking for new currency solutions. And with this global powerhouse having now surpassed the G7 in economic growth, China opening its borders to crypto, and the UAE now accepting Renminbi for liquid natural gas deals, the West may do better to refocus its attention.

Mike Colonnese: a ‘positive for the industry’

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Mike Colonnese, H.C. Wainwright & Co managing director and senior crypto analyst, commented in a research note the stablecoin bill represents the first major crypto legislation proposed in 2023.

He writes that clarity for stablecoin providers is a “positive for the industry” and will “enable more investors to get comfortable with the sector.”

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