United States Has Finally Passed the STABLE Act

This is a major milestone for the US stablecoin industry as the US House Financial Services Committee passed the act with a 32-17 vote to bring clarity to this digital assets sector.

The U.S. House Financial Services Committee has passed the STABLE Act bill that would create a regulatory framework for USD-pegged stablecoins.

The committee passed the bill with a 32-17 vote.

The bill, which stands for Stablecoins, Technology, and Applied Blockchain Events for Law Enforcement Act, would provide a clear path for stablecoins to function smoothly in the U.S. financial system. It aims to maintain an optimal balance between technological innovation and consumer protection.

The bill, introduced by French Hill (R-Ark.), would place stablecoins used for payments with at least $1 billion in daily volume under the supervision of the Federal Reserve.

It would also mandate that stablecoin issuers maintain a minimum capital reserve in a U.S. banking institution, varying from 5 percent for issuers with less than $3 billion in capital to 10 percent for issuers with over $10 billion in capital.

Moreover, the bill would prohibit issuers from engaging in certain activities such as derivatives trading and short-term lending.

“This legislation will ensure that stablecoins are introduced in a safe and measured way, providing certainty to innovators and technological advancements that will benefit the U.S. economy,” said Hill, who is also the chairman of the committee.

The bill is a modified version of the bipartisan legislation that stalled last year due to disagreements over the role of the Commodities Futures Trading Commission (CFTC) in overseeing the digital assets.

The bill would grant the CFTC authority over stablecoin issuers, a stance favored by Republicans, while leaving antitrust issues to the Department of Justice.

However, Democrats largely prefer the Securities and Exchange Commission (SEC) to oversee the nascent industry.

“This bill strikes the right balance by providing clear regulatory certainty in a rapidly evolving area of technology,” said Bryan Steil (R-Wis.), the subcommittee chair.

“It will enable the U.S. to remain a global leader in financial innovation and technology.”

The bill now heads to the House floor for a vote by the full chamber.