Stablecoin Issuance: Legal Requirements and Penalties

Overview of Stablecoin Issuance Requirements

The US Congress has released a discussion draft outlining the fundamental requirements for becoming a stablecoin issuer. This draft, part of the 118th Congress First Session, aims to establish the groundwork for legal recognition of stablecoin issuers, pending enactment by the Senate and House of Representatives.

Who Can Issue Stablecoins?

The draft specifies that both approved subsidiaries of insured depository institutions and licensed non-bank entities may be permitted to issue stablecoins. These entities must comply with a series of legal procedures to gain approval. Subsidiaries must submit a detailed application adhering to the established laws, while non-bank entities are required to publish a notice in a local newspaper following application submission.

Legal Procedures and Compliance

Entities seeking to issue stablecoins must navigate a structured approval process. The draft emphasizes the importance of adhering to legal requirements, ensuring transparency and accountability in the stablecoin issuance process. By following these steps, entities can legally issue stablecoins in the United States.

Restrictions and Penalties

The draft highlights significant restrictions on stablecoin issuance. It is unlawful for any person or entity to engage in issuing payment stablecoins in the United States without proper authorization. Violations of the law carry severe penalties, including fines up to $1,000,000, imprisonment for up to five years, or both. These measures underscore the importance of compliance with stablecoin issuance regulations.

Conclusion

The discussion draft from the US Congress aims to create a clear framework for stablecoin issuance, emphasizing legal compliance and stringent penalties for violations. By understanding and adhering to these requirements, entities can participate in the stablecoin market while avoiding severe legal repercussions.