A new bill proposed to control stablecoins in the US has sparked intense discussion among cryptocurrency experts. This legislative move, currently under development, could bring major changes to how digital currencies like Ethereum and its related stablecoins function.
A Big Win For Ethereum?
Ryan Berckmans, an influential figure in the Ethereum community and a seasoned investor, expressed his optimistic perspective on the proposed legislation through X, a widely-used social media channel. He labeled the bill as “very favorable” or “highly encouraging” for Ethereum in his post.
Based on Berckmans’ perspective, the key strength of the proposed legislation is its extensive recognition of stablecoins operating on public blockchains, primarily Ethereum, which hosts around 59% of all stablecoins and up to 93% when disregarding decentralized platforms such as Tron. In simpler terms, Berckmans believes that this bill significantly endorses Ethereum by providing widespread approval for stablecoins on American public chains, where the vast majority are produced.
The legislation allows US banks to apply for stablecoin licenses and permits certain private companies to issue up to $10 billion in stablecoins without prior approval. This change could significantly shift the banking industry’s perspective on digital currencies, making them more integrated into traditional finance and expanding their application in various economic domains.
Berckmans was thrilled with the bill’s handling of non-USD asset types, like on-chain euros and gold. In his view, this legislation does not include regulations on these assets, allowing a free market and boosting their value as potential reserve currencies or investment options.
Yet, Berckmans raised some issues with the proposed legislation. Of significance, the bill puts stringent controls on unauthorized USD-linked stablecoins, possibly barring their creation for US citizens dwelling in the US. This may affect widely used decentralized stablecoins such as DAI. Moreover, he expressed concerns over the bill’s expansive definition of “algorithmic payment stablecoin,” which might include various decentralized stablecoins employing algorithms to keep their value tied to the dollar or other assets.
New stablecoin bill draft
My initial read is that the bill is extremely bullish and legitimizes Ethereum.
I’m not a legal or regulatory professional, but I have reviewed parts of the newly proposed legislation using my knowledge and GPT4 as a tool. Feel free to examine it carefully on your own as well.
TL;DR– Ethereum wins big…
— Ryan Berckmans ryanb.eth (@ryanberckmans) April 17, 2024
Concerns And Criticisms
In contrast to Berckmans’ positive outlook, Jake Chervinsky, the Chief Legal Officer at Variant Fund and a previous CLO of the Blockchain Association, presented a more skeptical perspective. He voiced his worries through X, remarking that “the bill released today is seriously problematic: it seems to prohibit almost everything except for a limited range of centralized, custodial stablecoins.”
Stablecoin legislation should be a top priority for everyone who cares about crypto policy.
The published bill unveiled today has significant issues: it seems to outlaw most forms of stablecoins, leaving only a limited category of centrally managed and custody-based ones.
This would be far worse than status quo.
— Jake Chervinsky (@jchervinsky) April 17, 2024
Chervinsky additionally noted that the proposed legislation seems to go against some of the key ideas he expressed during his Congressional testimony last year. In his opinion, prioritizing custodial stablecoins is essential, but this bill might inadvertently establish regulatory barriers, limiting future advancements within the industry.
Although there were varying perspectives on the bill, Berckmans remained optimistic about its wider effects. He imagined a situation where limitations on USD-backed stablecoins might unexpectedly strengthen the demand for non-USD alternatives. This could lead to the growth and expansion of a more diverse stablecoin market. In time, he believed that the influence of USD-pegged stablecoins might lessen, paving the way for a more equitable stablecoin landscape.
The ongoing assessment and discussion within the cryptocurrency community about the proposed bill signifies its significant impact on the future development of stablecoins and blockchain technology in the US, potentially extending to a global scale.
At press time, ETH traded at $2,984.
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2024-04-18 12:42