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US lawmakers seek to make stablecoins illegal without federal approval

A new bill seeks to control the entire stablecoin industry by requiring all related activities to gain federal approval first.

As reported by cointelegraph, a new bill, introduced to US Congress on Wednesday night, could enforce blanket regulation on all stablecoins. If passed, any service provided in regards to these types of cryptocurrencies would become illegal without first receiving approval by multiple government bodies:

“It shall be unlawful for any person to issue a stablecoin or stablecoin-related product, to provide any stablecoin-related service, or otherwise engage in any stablecoin-related commercial activity, including activity involving stablecoins issued by other persons, without obtaining written approval in advance, and on an ongoing basis, from the appropriate Federal banking agency, the Corporation, and the Board of Governors of the Federal Reserve System.”

The bill, named “The Stable Act,” is intended to “protect consumers from the risks posed by emerging digital payment instruments, such as Facebook’s Libra and other Stablecoins.”

Assistant Professor at Willamette Law Rohan Grey said that the bill seeks “to prevent the kind of systematic ‘shadow-banking’ risks that led to the global financial crisis of 2007-2008.”

Democratic Party congresswoman Rashida Tlaib, the lead instigator of the bill, stated the Stable Act is planned to protect people of color and other minority groups who lack access to regulated financial services.

The bill has been met with strong disapproval from the crypto community. CoinShares chief strategy officer Meltem Demirors responded to Tlaib’s tweets, saying that “cryptocurrencies lower the cost of servicing the populations that have historically been excluded from the banking sector.”

In an eight-post thread on Twitter, Circle CEO and co-founder Jeremy Allaire declared that the act “would represent a huge step backward for digital currency innovation in the United States, limiting the accelerating progress of both the blockchain and fintech industry.”

Wyoming House Representative Tyler Lindholm said:

“Centralization of power for a decentralized world. No thanks. This industry has been light years more successful in bringing financial freedom to the unbanked and that happened without cronyism as suggested in this bill.”

Shapeshift CEO Erik Voorhees stated: “Let’s not force crypto to act like the banks maybe? (And indeed, it can’t, and won’t).”

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