Proposed U.S. Legislation Aims to Regulate Stablecoins with Two-Year Ban

Proposed Ban on Algorithmic Stablecoins

New draft legislation introduced in the U.S. House of Representatives seeks to impose a two-year ban on the issuance of new algorithmically pegged stablecoins, such as TerraUSD (UST). This move aims to address risks associated with these types of stablecoins, which have faced scrutiny due to their potential instability and impact on financial markets.

Regulatory Study and Collaboration

The proposed legislation mandates the U.S. Department of the Treasury to conduct a detailed study on stablecoins similar to UST. This study will be carried out in collaboration with key financial regulatory bodies, including the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Securities and Exchange Commission (SEC). The goal is to assess the risks and benefits of algorithmic stablecoins and develop a regulatory framework to ensure financial stability.

Implications for the Crypto Market

This legislative effort reflects growing regulatory scrutiny of stablecoins, particularly following the collapse of TerraUSD (UST), which triggered widespread market instability. The proposed measures could significantly influence the future of stablecoins in the U.S., potentially shaping how these assets are issued, regulated, and used in the financial system.