July 25 (UPI) – Congress and President Donald Trump have taken measures to the regulation of digital currency with the adoption of a set of CAPITOL HILL bills.
Trump signed the National Innovation Act and to establish national innovation for the Stablescoins Act and the Act on Engineering last week, establishing a stablecoin regulation framework, a form of cryptocurrency supported by a stable asset.
Industry stakeholders applaud the law, saying that it will allow the United States to be a leader in digital finance. Economists are not unanimously convinced that it will be the consumer -oriented game changer.
“The adoption of the Act on Engineering represents an important step towards the creation of a clear regulatory base for the digital asset industry in the United States,” said Paolo Ardoino, CEO of the Pioneer Tether cryptocurrency company, in a statement to the UPI. “The United States now has the possibility of reaffirming its leadership in digital finance by supporting open networks and programmable money. Stablecoins have become essential infrastructure on global markets, access to a dollar, improving cross-border regulations and strengthening financial resilience.”
The Act on Engineering is only one element of legislation which underlines the interest of the legislators to establish directives for the field of digital finance. The Chamber adopted two other bills last week concerning cryptocurrency: the law on the clarity of the digital asset market and the anti-CBDC law. Both must pass the Senate to become law.
Aaron Klein, principal researcher at Brookings Institution, told UPI that, if we consider these actions together, a signal is sent to consumers that cryptocurrency is there to stay.
“This is something that the government sustains passively and explicitly,” said Klein. “The enthusiasm of the congress and the president personally publishing his own crypto for his own financial gain is a giant signal for the American public. Many of them will see it as a green light and will not look at small characters.”
Genius
The Government Act will allow the government to regulate license grant and authorization for stable companies to offer and sell stablescoin in the United States. It also allows the federal government to enforce regulations with the use of fines and imprisonment for violations.
Companies seeking to issue stablescoin are required to have capital to save them. They must also meet the declaration and audit requirements.
In terms of American interests, stablecoin regulated by the United States could extend access to the US dollar around the world because of its requirement that it is supported by the dollar or invoices of the Treasury.
“What will happen is that it creates a new market but also a passive demand for the American government debt,” Joshua Robert Hendrickson, professor of economics in Ole Miss, told Upi. “In doing so, this potentially weakens the mechanism by which the increase in debt tends to result in higher borrowing costs.”
The law opens the way to a wider adoption of Stablecoin, Christian Catalini, founder of MIT Cryptoeconomics Lab, told UPI.
“No bill is perfect, but it is an excellent starting point for the general public adoption,” said Catalini. “I am sure there will be other adjustments along the way by learning more about the strengths and weaknesses of the current law.”
Licenses will not be limited to traditional financial institutions. Fintech companies may also request authorization to issue stablecoins.
“I expect a lot of entry by American banks, fintechs and digital wallets,” said Catalini. “Some foreign fintechs and neobanks will benefit from this as an opportunity to expand their presence and their services in the United States.”
Klein said he is waiting to see how foreign companies will be processed by federal regulators. He thinks that the law on genius does not establish strong enough railing to ensure that foreign companies, such as Tether, are held to the same audit standards as American companies.
“One of the major gaps in the Act on Engineering is the ability to certify to an American standard that the verified financial statements of stablecoin issuers are accurate and high quality,” Klein said. “The first test of the genius law will come from the way in which the stablescoins emitted abroad as Tether are treated in their audit. Because Tether does not use the audit standards on their behalf.”
Klein is also not convinced that the adoption of Stablecoin will considerably improve American payment systems. Real -time banking transactions are a reality in Brazil, Mexico, England and Japan for years and, in some cases, decades.
The United States has adopted the accelerated law on the availability of funds in 1987. This defined maximum retention periods and generally requires cash and electronic deposits to have the following working day.
“You don’t need stablecoins to have real -time payments,” said Klein. “You need a federal reserve that cares about workers that we have not seen for decades. Instead, the federal reserve has prioritized the bank benefits of overdraft costs to help people access their own money.”
The bill has been promulgated does not guarantee its effectiveness, adds Klein. It is up to federal regulators to create and adopt policies that they will then perform. There have been cases where execution failed, leaving the consumers exposed.
In 1994, the law on ownership and protection law was adopted to establish consumer protections against predatory home loan practices. He called on federal regulators to regulate premium risk mortgages. More than a decade later, the increase in risk mortgages at risk culminated in the great recession.
“In 1994, the Congress adopted a law obliging the federal reserve to regulate subprime mortgages and they did not do it,” said Klein. “Alan Greenspan said we don’t need to regulate this market. Look how it worked.”
Bills advancing at Congress
The anti-CBDC monitoring law prohibits the federal reserve from issuing a digital currency of the central bank.
The Federal Reserve explored the potential risks and advantages associated with the creation of a digital currency from the Central Bank as part of an executive decree signed by former President Joe Biden in 2022.
Representative Tom Emmer, R-minn., Sponsored the bill to the House. On the floor of the House before the vote, he declared that the impetus for the bill is a concern that a digital dollar issued by the federal reserve would be used to follow consumers.
“Unlike decentralized digital assets, a CBDC is a digital form of sovereign money that is designed, issued and monitored by the federal government,” said Emmer. “It is programmable money controlled by the government which, if it was designed without the protection of the privacy of money, could give the federal government the possibility of monitoring and restricting the transactions of the Americans and of monitoring all aspects of our daily life. In other words, each dollar that you spend, where you spend it, with whom you all spend it visible and followed by the vigilant eyes of Washington.”
According to Hendrickson, a centralized digital currency offers a solution where there is no problem.
“One of the things that people say would be an advantage of a central banking currency, they indicate the number of people who have no bank accounts,” said Hendrickson. “They say that this would give greater access to the FDIC services. If people have no bank accounts, when you ask them why their first reason is that they do not trust the banks. It is therefore not clear why they would trust a central bank.”
“I don’t think people want to abandon this degree of privacy,” he said.
When the US Treasury Department encouraged Biden administration to continue to study the potential of a digital dollar issued by the government, it carefully stressed the importance of innovation.
“It was sold as this technological innovation, but no technology is necessary,” said Hendrickson. “The simple fact of giving more people access to their big book is not a form of technology.”
Like the law on engineering, the law on the clarity of the digital asset market aims to set up a regulatory framework for cryptocurrency. He does so by codifying surveillance responsibilities and defining what is considered a digital goods.
Surveillance responsibilities would belong to the Securities Exchange Commission and to the Commodity Futures Trading Commission. The role of the SEC would be in the regulation of the cryptocurrency offered as investment options, such as the cryptocurrency offered within the framework of an investment contract.
The high -level collapse of the Silicon Valley Bank in 2023 and the FTX fraud scandal which began to take place in 2022 pushed the need for regulation in the foreground, said Hendrickson.
“At the time, what was really going on was that any cryptocurrency regulation occurred thanks to the application of the dry,” he said. “You would discover that you have broken a rule when the SEC has brought charges against you. It is not an effective way to regulate an industry. The collapse of the FTX was a catalyst for politicians and the people of the industry to say, look, the time has come to set up a regulatory framework for this kind of thing.”
