The United States Congress has introduced a new draft bill which provides a regulatory framework for stablecoins in the nation in a House of Representatives document repository a few days prior to the scheduled hearing on the topic on April 19.

Initially introduced in 2014 with the release of BitUSD, stablecoins are a class of cryptocurrencies which aim to offer crypto investors and traders with price stability as they are effectively pegged to other assets with a value that is universally-agreed, such as the U.S. dollar.

According to the document which intends to “provide requirements for payment stablecoin issuers, research on a digital dollar, and for other purposes,” the Federal Reserve will be in charge of regulating non-bank stablecoin issuers, such as Tether which issues USDT and Circle which issues USDC.

The draft bill proposes that insured depository institutions which seek to issue stablecoins shall be supervised by the appropriate federal banking agency, while non-bank stablecoin issuers will be overseen by the Federal Reserve. Failure to register can result in up to five years of jail time and a million-dollar fine.

To be approved, the entity must be able to maintain reserves backing the stablecoins with U.S. dollars, Federal Reserve notes or Treasury bills with a 90-day maturity or less, repurchase agreements with a maturity of seven days or less backed by Treasury bills with a maturity of 90 days or less, and central bank reserve deposits.

Sources:

https://cointelegraph.com/news/u-s-congress-to-introduce-new-draft-bill-for-stablecoins

https://www.theblock.co/post/226575/new-stablecoins-bill-draft-introduced-house-of-representatives

https://docs.house.gov/meetings/BA/BA21/20230419/115753/BILLS-118pih-Toproviderequirementsforpaymentstablecoinissuersresearchonadigitaldollarandforotherpurposes.pdf