US regulations for stablecoins may soon change with a newly introduced bipartisan bill. The bill aims to define the terms of stablecoins and achieve user protection from volatility or liquidations.
The new US regulatory bill was proposed by representatives Bill Huizenga, Bryan Steil, and French Hill. According to Huizenga, stablecoins may be an addition to payment options, adding new ways of moving money.
Stablecoins have the potential to simplify our payment systems and revolutionize the way we move money. I’m proud to be an original cosponsor of this bipartisan bill with @RepBryanSteil and @RepFrenchHill and look forward to next week’s markup. https://t.co/fVZjgvK0l8
— Rep. Bill Huizenga (@RepHuizenga) March 26, 2025
The bill follows the drive for clearer and more convenient crypto regulations that will drive adoption. The bill arrives for discussion at a time of record stablecoin supply, with over 144B USDT and 60B USDC tokens already in circulation.
US Stable Act may target risky assets
As with other stablecoin regulations, the biggest concern is the ability of assets to retain their predetermined price, in most cases $1. Stablecoins either use cash or cash-like assets or rely on crypto collaterals. A handful of stablecoins rely on self-stabilizing algorithms and are considered the riskiest.
The Stable Act contains mentions of asset-backed crypto stablecoins, defining a class of ‘endogenously collateralized stablecoins.” This class also includes assets that can be converted back to monetary value. The bill’s Section 11 proposes a Moratorium on self-collateralized stablecoins.
This special class of stablecoins includes all tokens that rely “solely on the value of another digital asset created or maintained by the same originator to maintain the fixed price.”
This model of stablecoins recalls the case of Terra (LUNA), where the issuance of UST relied on the price of LUNA. Currently, there are stablecoins backed by external assets and tokenized RWA, such as bonds. This type of asset includes DAI and SKY.
There are only rare attempts to recreate the LUNA model, with talks of issuing similar tokens on Sonic, or possibly an asset created by World Liberty Financial. The new regulations may raise issues for Ethena’s USDe, which is already facing problems in Germany.
The new bill would prevent the creation of self-financed stablecoins with a growing supply. The bill also suggests a period of study of stablecoin use cases, headed by the Secretary of the Treasury, in consultation with the Board, the Comptroller, the Corporation, the National Credit Union Administration, and the Securities and Exchange Commission.
The study will take up to a year and test all non-payment stablecoins and assets linked to decentralized protocols. All algorithmic or asset-backed stablecoins will be tested for their exact category and technological design. Regulators will explore the nature of crypto or other asset reserves, any governance structure, and the exact level of decentralization. The bill also proposes to test public outreach and the clarity of risk warnings for each project.
Stablecoin issuers to present monthly reports
Currently, stablecoin minting, movements, and assets are only available through on-chain investigation. The US stablecoin bill will introduce new layers of mandatory reporting, with the burden of filing falling on stablecoin issuers.
A permitted stablecoin issuer, as the bill refers to all minting entities, will have to provide a report to be examined by a registered public accounting firm. The CEO and CFO of stablecoin issuers will also submit a monthly report on the truthfulness of the available data.
Regulators will also observe and determine the right guarantees and collateral. The new reporting burdens will affect mostly small non-payment stablecoin projects, which are used as a form of on-chain bonds, or within smaller crypto lending protocols.
Payment stablecoin issuers, which offer tokenized USD, will be treated as financial institutions and be covered under the Bank Secrecy Act. Payment stablecoins are singled out as a separate category in the proposed bill. The main criterion is that a payment stablecoin issuer should not pay interest or yield to holders of its dollar-pegged tokens.
The bill may regulate existing payment tokens like USDT and USDC, while also opening the doors to creating new localized or niche payment assets.
If the bill is applied to US crypto regulation, it may shift the stablecoin landscape and lead to delistings. The regulations share similarities with EU MiCA requirements, which disqualify most of the decentralized stablecoins due to insufficient guarantees of safety to end users.
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