Stablecoin legislation is on the table during this congressional session, a Republican congressman on the Financial Services Committee said.
Rep. Warren Davidson (R-OH) said that lawmakers are hoping to build off the work made last Congress toward an agreement on a bill to regulate stablecoins, which is a form of cryptocurrency that ties its value to an underlying asset, such as gold or fiat currency. Stablecoins don’t fluctuate in value wildly, as some cryptocurrencies such as bitcoin have, because they are asset-backed.
With split control of Congress, most legislation will have to have significant bipartisan buy-in. The possibility of a regulatory framework for stablecoins would likely be welcome news for the industry, which is reeling from a dismal 2022 for cryptocurrency prices.
“Hopefully we can get a level of clarity and definition around some federal standard for stablecoins,” Davidson said during an interview with Politico. “That would grandfather in some way for some of those already compliant state-regulated entities to be able to fall within that regime.”
BITCOIN STARTS 2023 WITH MOMENTUM
“We’ve got to get moving to be able to pull it off,” Davidson said, noting that he is hoping there is some movement on legislation within about a six-month window.
There have been calls for more federal regulation of traditional crypto assets such as bitcoin and ethereum, as well as stablecoins. Last year, the Financial Stability Oversight Council released a report with recommendations that Congress craft regulation around stablecoins.
The council also recommended that lawmakers pass legislation that would form a “comprehensive federal prudential framework for stablecoin issuers” that would address investor protection, market integrity, and payment system risks.
“The Council recommends that federal and state regulators coordinate on the supervision of stablecoin issuers as appropriate,” the report reads. “The Council remains prepared to consider steps available to it to address such risks related to stablecoins in the event comprehensive legislation is not enacted.”
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Davidson’s remarks come as bitcoin and other cryptocurrencies are mounting a comeback from the lows felt following the dramatic collapse of crypto giant FTX last November. As of Tuesday, bitcoin was trading at nearly $23,000, a big 36% increase from where it was just a month ago.
