A new draft bill which would label stablecoins as securities has been introduced to the House Financial Services Committee on 18 October.
Introduced by Rep. Sylvia Garcia the new bill, called “Stablecoins are Securities Act of 2019”, says that stablecoins must be seen as investment contracts, and therefore be regulated under the Securities Act of 1933. The bill states:
“The market value of such digital asset is determined, in whole or in significant part, directly or indirectly, by reference to the value of a pool or basket of assets, including digital assets, held, designated, or managed by one or more persons.”
It appears as if the proposed bill is aimed at Facebook’s Libra stablecoin, which the social giant introduced in June, and plans to launch in 2020.
So far this specific cryptocurrency has seen quite a pushback from regulators around the world, and especially the U.S., where lawmakers have gone as far as to request that all development around the project is halted until regulatory concern has been addressed.
Facebook’s CEO, Mark Zuckerberg, will appear before the committee on 23 October, in an attempt to defend Libra.
In order to be signed into law, which would give the SEC authority over all stablecoins, the proposed bill will need to be first voted out of the committee. Then it’ll need to pass in the House of Representatives, later passed in the Senate, and then signed into law by the U.S. President.
Recently the Financial Stability Board released a report, which stated that stablecoins could pose a risk to the global financial system.
Even if all regulatory concerns are addressed, the report continued, it is not certain if a stablecoin will have a regulatory approval.