U.S. Proposes Two-Year Ban on New Algorithmic Stablecoins

Proposed Ban on Algorithmic Stablecoins

The U.S. House of Representatives has introduced draft legislation that would impose a two-year ban on the issuance of new algorithmically pegged stablecoins, such as TerraUSD (UST). This move aims to address concerns over the stability and risks associated with such cryptocurrencies.

Regulatory Collaboration and Study Requirements

Under the proposed legislation, the Department of the Treasury would be required to conduct a comprehensive study on stablecoins similar to UST. This study would involve collaboration with key financial regulators, including the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Securities and Exchange Commission. The goal is to better understand the mechanisms, risks, and potential impacts of algorithmic stablecoins on the financial system.

Implications for the Market

The draft legislation reflects growing regulatory scrutiny of stablecoins, particularly in the wake of high-profile failures like TerraUSD. By imposing a moratorium and requiring a detailed study, lawmakers seek to balance innovation with financial stability. The outcome of this proposal could significantly shape the future of stablecoins and the broader cryptocurrency market in the United States.