Crypto News: Stablecoin Bill Likely to Hit a Wall in Congress

Congress, which is in the last week of its August break, is the topic of this week's cryptocurrency headlines. As has been the case this year, policymakers are beginning to converge on the Capital once again, and cryptocurrency is among their top discussion subjects. Although many proposals have surfaced in recent months, only one specific stablecoin law has seemed to be closer to a vote than the others. However, the way things are going, even this piece of legislation could be dead due to poor communication.

Recently, several lawmakers have developed a keen interest in cryptocurrencies and how to govern the sector. Of course, there have already been some early legislation and calls to action. However, these initiatives weren't taken as seriously until early this year. Prior to President Joe Biden's executive order on cryptocurrencies, that is.

Investors have seen some significant advances in the cryptocurrency space this summer. The bipartisan market regulation measure from senators Cynthia Lummis and Kirsten Gillibrand is the most significant piece of legislation. The dispute over whether to grant the Commodity Futures Trading Commission (CFTC) or the U.S. Securities & Exchange Commission (SEC) more regulatory authority is being stoked by this piece of legislation.

However, politicians are also showing interest in stablecoins, even if that measure seems to be in a standstill. This is primarily due to the attention the stablecoin market has seen since the Terra (LUNC-USD) crypto network and its stablecoin collapsed in May. At the time, multiple stablecoins, including Terra's own, de-pegged, which led to significant fear among investors.

Stablecoin Bill Seems Likely to Fail in the Crypto News

A wave of negative cryptocurrency news is putting pressure on Congress to pass legislation that better safeguards investors. But as it happens, at least one of the two significant stablecoin measures will probably die in committee.

Senator Pat Toomey proposed one of these proposals that would require stablecoin suppliers to disclose their reserves. Currently, providers are not compelled to reveal the assets that support and maintain the pegged values of their currency. They could choose to add a variety of assets to their reserves as a result. Companies would be influenced by this measure to only hold sound reserve assets, such as USD, as opposed to commercial paper.

Similar goals are sought after by a different measure by House members Maxine Waters and Patrick McHenry. According to the proposed legislation, stablecoin supply must be retained at a 1:1 ratio to the value of reserve assets. Another thing that businesses are not compelled to do by law is this. A lot of them don't, particularly contentious algorithmic stablecoins.

Toomey's measure has benefited from the August congressional break as he looks for bipartisan support to increase its chances of passing. The measure from Waters and McHenry is a different matter. These lawmakers wanted to vote on their measure prior to the break. That did not occur.

Now, according to analysts, there is a far lower chance that the law will be passed or even come up for a vote. Many Congressmen are turning their attention to running for reelection since this is a midterm election year. Thus, these individuals are focusing on more important problems. Rumors have it that the committee may vote on the measure around the middle of September. Investors could have to wait until 2023, during the next Congressional session, if it manages to slide through the gaps, to see any progress.