US proposes to ban the issue of algorithmic stablecoins

In this, the authorities propose to introduce a two-year grace period for existing issuers

21.09.2022 - 06:45

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What’s new? A new bill of the US House of Representatives will impose a two-year ban on “endogenously collateralized stablecoins” whose value depends on a cryptocurrency issued by the same issuer. The Bloomberg news agency reports this.

News on the Bloomberg website

What else is known about the new bill? The bill requires the Treasury Department to conduct a study on algorithmic stablecoins and consult with the Federal Reserve System (Fed), the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).

If authorities vote to impose the ban, it would cover stablecoins whose price depends on the value of another virtual asset of the same creator, and which can be converted, redeemed, or otherwise repurchased at a fixed price.

It is also known that in addition to imposing a moratorium, the US authorities plan to grant a two-year grace period for existing issuers of algorithmic stablecoins to change their economics and asset backing model over that period.

To learn more about the potential of algorithmic stablecoins and the risks associated with them, see GetBlock Magazine’s article.

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