Under the current draft of the bill, it would be illegal to issue or create new “endogenously collateralized stablecoins,” according to a copy of the legislation obtained by Bloomberg. This definition would kick in for stablecoins marketed as being able to be converted, redeemed, or repurchased for a fixed amount of monetary value, and that rely on the value of another digital asset from the same creator to maintain their fixed price.
TerraUSD, also known as UST, was designed to maintain a 1-to-1 peg to the US dollar through an algorithm and trading in a sister token called Luna. That experiment failed spectacularly when UST crashed in May, resulting in billions of dollar of losses and prompting policymakers to take renewed interest in stablecoins.
The draft legislation would mandate a study on Terra-like tokens from Treasury in consultation with the Federal Reserve, the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., and the Securities and Exchange Commission.
House Financial Services Committee Chairwoman Maxine Waters and Ranking Member Patrick McHenry have been working to reach an agreement on the stablecoin legislation, though people familiar with the discussions said it’s unclear if McHenry, a Republican, has approved the latest draft.
McHenry and Waters’s offices didn’t immediately return a request for comment.
It’s possible the panel could vote on the bill as early as next week, the people said. But Brad Sherman, one of the most senior Democrats on the committee, told Bloomberg Tuesday that a markup date hasn’t yet been decided.
The panel’s window for considering the bill before the end of the year is shrinking, especially with the upcoming midterm elections throwing a wrench into the process.
