U.S. Congress Advances Bills for Regulatory Framework on Stablecoins
The U.S. Senate and House are reviewing bills to establish a regulatory framework for stablecoins. Key points include:
- Senator Elizabeth Warren expressed concerns that the GENIUS Act could enhance terrorism financing.
- Representative Brad Sherman highlighted risks of using unhosted wallets to bypass anti-money laundering laws during discussions on the STABLE Act.
- Both acts address illicit finance, proposing to classify stablecoin issuers as financial institutions under the Bank Secrecy Act (BSA).
- Stablecoins are designed to maintain stable value, serving as digital mediums of exchange and enhancing existing payment systems.
- Lawmakers aim to ensure stablecoins remain stable while tackling concerns about financial surveillance.
- BSA requires financial institutions to monitor transactions and report suspicious activity, which may extend to stablecoin transactions between users.
- Debate exists on whether applying BSA regulations to unhosted wallets constitutes an invasion of privacy.
- Sponsors of both bills emphasize the need to limit surveillance obligations to respect user privacy during transactions without intermediaries.
Legislation must clearly define surveillance boundaries to protect individual rights and prevent expansive interpretations in the future.