US lawmakers introduce Stablecoins Transparency Act

US lawmakers Trey Hollingsworth, representative for Indiana, and Sen. Bill Hagerty, representative for Tennessee, introduced a bill named as ‘Stablecoins Transparency Act’ on March 31. The bill aims to bring greater transparency to the stablecoins marketplace. The act would oblige stablecoin issuers to report on their reserves. After implementation, the act would significantly impact stablecoin issuers like Tether (USDT) and Circle (USDC).The bill has received a lot of support from both lawmakers and people in the industry, Hollingsworth was cited as saying by coindesk.com.
The Stablecoin transparency aims to achieve the following objectives and lays down the following provisions:
* The act would set standards for the quality of assets held in reserves.
- For this, the stablecoins to be fully backed by a combination of US dollars or short-term government securities with bonds having maturities of less than 12 months.
* Stablecoin issuers would be obliged to regularly publish audited reports of their reserves.
* The bill aims to safeguard consumers and the economy without risking innovation.
* Senator Hagerty said that the bill is necessary to give clarity to all those in the cryptocurrency market from regulators to customers who face uncertainty everyday regarding the safety of their funds.
* Senator Hollingsworth admitted that the bill may not be a solution for every problem but it has certainly struck a balance between development, technology and protection of consumers.
* Although most of the stablecoins are tethered to dollars, Hollingsworth and other legislators have tried to draft a bill that is not dollar-specific and limited in scope.
Some of the largest stablecoins like Tether and Circle have been a source of immense speculation because of not revealing their reserves to the public. The stablecoin market that is worth $180 billion in 2022 from $38 billion in 2021 has been a cause of concern for the regulators for some time. They have been voicing their fear over the potential risks for the larger economy in case of a bank run on stablecoin issuers.
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