From beincrypto by Kamina Bashir

On February 10, Maxine Waters, the representative for California’s 43rd Congressional District, introduced an initial discussion draft. The unnamed bill seeks to establish a regulatory framework for stablecoin issuers in the US.

It follows extensive bipartisan negotiations and technical guidance from the Treasury Department and the Federal Reserve.

Maxine Waters Pushes For Stablecoin Regulation

The proposed bill outlines a licensing and regulatory framework for payment stablecoin issuers. It details the criteria for both nonbank and bank issuers. A central feature is the Federal Reserve’s role in supervising stablecoin issuers. This ensures strict compliance with the proposed regulations.

The bill mandates that stablecoin issuers back their coins one-to-one with reserves. This includes US currency, insured deposits, short-term Treasury bills, or repurchase agreements backed by Treasury securities. 

It also prohibits any unauthorized individual or entity from issuing a payment stablecoin in the US. Violators would face significant penalties.

“Be fined not more than $1,000,000 for each such violation; (ii) imprisoned for not more than 5 years; or (iii) be fined as described in clause (i) and imprisoned as described in clause (ii),” the bill read.

In addition to regulatory oversight, the bill includes provisions designed to strengthen consumer protection. It prevents non-financial companies from owning stablecoin issuers, ensuring the separation of banking and commerce. 

The proposal also mandates strict compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) laws. Therefore, it subjects issuers to US sanctions laws.

Additionally, it bans individuals convicted of certain crimes, such as Sam Bankman-Fried, from holding executive positions or significant shares in stablecoin issuers.

The Federal Reserve would be granted enforcement authority. At the same time, existing regulators, including the Treasury Department, the Consumer Financial Protection Bureau (CFPB), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC), would maintain oversight over activities related to stablecoins, wallet providers, exchanges, and intermediaries.