Bill Overview
Title: To establish reporting requirements for persons who issue fiat currency-backed stablecoins, and for other purposes.
Description: This bill addresses the regulatory treatment of fiat currency-backed stablecoins. The bill defines these as digital assets that (1) maintain price stability by backing the value with a nondigital currency, and (2) can be redeemed in that currency on a one-to-one basis. Under the bill, the Securities and Exchange Commission and the Commodity Futures Trading Commission are prohibited from regulating fiat currency-backed stablecoins. The bill requires stablecoin issuers to hold all associated reserves in (1) government securities that mature in not more than 12 months, (2) fully collateralized security repurchase agreements, and (3) U.S. dollars or other nondigital currency.
Sponsors: Rep. Hollingsworth, Trey [R-IN-9]
Target Audience
Population: People who uses fiat currency-backed stablecoins
Estimated Size: 50000000
- Stablecoin issuers, such as private companies and financial institutions, will be directly affected as they will have to comply with the new reporting requirements.
- Investors in stablecoins, especially those using them for transactions or as a store of value, may be impacted due to changes in issuer practices and increased transparency.
- Financial markets participants and traders who might experience changes in liquidity levels and the stability of these coins.
- Other cryptocurrency issuers and holders, although not directly impacted, may experience indirect effects through regulatory precedents or market shifts.
- Regulators such as the SEC and CFTC will no longer have authority over stablecoins, impacting their operational scope.
Reasoning
- The policy primarily affects companies and individuals directly involved with stablecoins, since it regulates how reserves must be held, aiming at bolstering stability and trust. Hence, this regulation mostly targets entities and people in the cryptocurrency space, creating direct repercussions for stablecoin issuers.
- In the U.S., given its strong presence in the global cryptocurrency market, many individuals use stablecoins for transactions, savings, and investments. These users might see this policy as a way to ensure stability and safety, potentially influencing their wellbeing positively.
- On the contrary, other cryptocurrency investors might feel constrained by increased regulation that could limit financial innovation, leading to potential indirect negative effects.
- The impact on wellbeing will vary: for some, increased stability means increased trust and usage freedom, while others may view this as regulatory overreach which might inhibit growth or innovation.
Simulated Interviews
Cryptocurrency Trader (New York, NY)
Age: 35 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- I think the policy could be positive if it improves stablecoin stability, which will help my trading confidence.
- It might limit some creativity in the market, but stability is important for serious trading.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Tech Entrepreneur (San Francisco, CA)
Age: 42 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- I'm worried about any increase in compliance costs, but ensuring stability could attract more users.
- I hope the policy won't be a hindrance to innovation.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 6 | 3 |
| Year 20 | 5 | 3 |
Software Developer (Miami, FL)
Age: 28 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- I'm not sure I'd notice directly, but knowing my investments are safeguarded by firm regulations could be reassuring.
- This might lead to increased adoption, which could be interesting career-wise for work in blockchain.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 4 |
Financial Analyst (Chicago, IL)
Age: 50 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 4.0 years
Commonness: 8/20
Statement of Opinion:
- Regulation might add some much-needed stability to the market, possibly reducing volatility.
- Good policies could make digital assets more trustworthy in the eyes of traditional investors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 3 |
| Year 5 | 5 | 3 |
| Year 10 | 5 | 2 |
| Year 20 | 4 | 2 |
College Student (Austin, TX)
Age: 22 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 1.0 years
Commonness: 15/20
Statement of Opinion:
- I don't think this policy affects me much at the moment, but I might invest in stablecoins if they seem more secure.
- I'd like to see how this policy influences the adoption at large before making decisions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Retail Business Owner (Los Angeles, CA)
Age: 38 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 6.0 years
Commonness: 9/20
Statement of Opinion:
- If the regulation makes transactions smoother, it would be great for my business.
- I hope this doesn't result in higher transaction costs or lower efficiencies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 6 | 4 |
| Year 20 | 6 | 4 |
Cryptocurrency Enthusiast (Seattle, WA)
Age: 31 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- I'm worried regulatory involvement might encroach on privacy, but stablecoin stability is important.
- I wish there was a stronger focus on consumer privacy in these policies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 4 |
Bank Regulator (Denver, CO)
Age: 40 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- It's essential for financial stability to have clear guidelines around stablecoins.
- This could serve as a model for broader crypto regulation, despite my views on its necessity.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 3 |
| Year 20 | 4 | 3 |
Freelance Graphic Designer (Portland, OR)
Age: 27 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I really value lower costs from stablecoins, so as long as those remain low, I'm fine with the policy.
- An increased fee structure would affect my willingness to use them strongly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Legal Consultant for Tech Firms (Boston, MA)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- It's always a challenge balancing regulation and innovation.
- Mass adoption will need clearer regulatory paths—this is a step toward that.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 3 |
Cost Estimates
Year 1: $750000000 (Low: $500000000, High: $1000000000)
Year 2: $650000000 (Low: $450000000, High: $850000000)
Year 3: $600000000 (Low: $400000000, High: $800000000)
Year 5: $550000000 (Low: $350000000, High: $750000000)
Year 10: $500000000 (Low: $300000000, High: $700000000)
Year 100: $400000000 (Low: $200000000, High: $600000000)
Key Considerations
- The potential impact on innovation within the cryptocurrency space as a result of increased regulation.
- The reaction of the stablecoin market to compliance costs, including possible consolidation among issuers.
- Legal challenges that might arise from the prohibition of SEC and CFTC regulation could temporarily impact market stability.
- International implications, as U.S. regulation of stablecoins might set precedents affecting global markets.