Transparent backing of stablecoins may be the new standard.
U.S. Lawmakers Rep. Trey Hollingsworth (R-IN) in the House and Sen. Bill Hagerty (R-TN) in the Upper Chamber introduced a bill in the House and Senate aimed at increasing transparency within the stablecoin market.
The ‘Stablecoin Transparency Act’ would set the standards for the “quality of assets held in reserves” by requiring stablecoins to be fully backed by a combination of U.S. dollars and “government securities with maturities less than 12 months”. Stablecoins are cryptocurrency tokens pegged 1:1 with fiat, typically USD. The idea goes that for every stablecoin there is an equal bill in circulation that can be ‘redeemed’ when they decide to.
Stablecoin issuers will also be compelled under the new act to publish audited reports regularly to demonstrate their reserves. This will have a significant impact on stablecoin issuers such as Circle ($USDC) and Tether ($USDT), whose treasury backing the coin has been speculated against for years.
Sen. Hagerty persists that the act won’t put power into the “unaccountable bureaucrats who threaten to choke off innovation”, rather it is aimed at consumer protection.
From whether coins are securities or commodities, to who is in charge of regulating them, those in the cryptocurrency marketplace are navigating significant ambiguity.
Sen. Bill Hagerty