Unleashing the STABLE Act: A Regulatory Leash for Digital Assets
Lawmakers Advance Measures to Oversee Stablecoins, Prohibit Certain Digital Assets Temporarily
As the digital asset landscape continues to evolve, US House Financial Services Committee Chair French Hill and Digital Assets Subcommittee Chair Bryan Steil have thrown their hats in the ring with the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act of 2025. This proposed legislation takes a step towards creating a robust regulatory framework for stablecoins, ensuring they don't ruffle a feather in financial stability.
Curbing Pegged Nasties: A Two-Year Moratorium
The bill proposes a temporary halt on the issuance of certain stablecoins, dubbed endogenously collateralized stablecoins. These are the digital assets pegged solely to another digital token, issued or maintained by the same entity. Lawmakers fear these stablecoins might stir up liquidity, volatility, and manipulation issues.
Consequently, the bill commandeers the U.S. Treasury Department, Federal Reserve, Securities and Exchange Commission (SEC), and Office of the Comptroller of the Currency (OCC) to run a comprehensive study to assess the true colors of these digital assets. The study will delve into their technological foundations, governance structures, and reserve compositions, alongside their impact on financial markets and consumer protection.
Defining Issuer Eligibility and Amping Up Oversight
The proposed framework seeks to define the who's who of authorized stablecoin issuers, requiring them to fall under one of two categories: insured depository institutions or qualified non-bank entities that meet stringent capital, liquidity, and transparency standards.
In addition to slapping on a light-handed leash, the bill rolls out new oversight mechanisms for stablecoin issuers. This includes monthly financial disclosures, independent audits, and robust risk management protocols.
In an official statement, Digital Assets Subcommittee Chair Bryan Steil remarked,
"By now installing a sensible regulatory structure for payment stablecoins, we safeguard further innovation while fortifying the U.S. dollar's lofty status as the world's reserve currency, and watch over consumers and investors. I can't wait to hear feedback from various stakeholders as we work towards creating smooth sailing on this innovative tech boat."
Upon passage, federal agencies will have 180 days to craft implementation rules, followed by an 18-month grace period before enforcement kicks in.
Dodging the Bullet: The GENIUS Act's Earlier Salvo
Before the STABLE Act's arrival, a collection of US senators had already entered the ring with the bipartisan Guiding and Establishing National Innovation (GENIUS) Act to regulate stablecoins and champion financial innovation.
The GENIUS Act, sponsored by motivated senators Bill Hagerty, Tom Scott, Cynthia Lummis, and Kirsten Gillibrand, classifies stablecoins as digital assets pegged to the US dollar and sets forth licensing and reserve requirements. Issuers with $10 billion or more in assets must adhere to Federal Reserve regulations, while smaller firms operate under state oversight.
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- The Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act of 2025, proposed by US House Financial Services Committee Chair French Hill and Digital Assets Subcommittee Chair Bryan Steil, aims to regulate stablecoins to prevent threats to financial stability.
- The bill temporarily halts the issuance of certain stablecoins called endogenously collateralized stablecoins, which are pegged solely to another digital token, due to concerns about liquidity, volatility, and manipulation risks.
- The bill requires stablecoin issuers to be either insured depository institutions or qualified non-bank entities that meet specific capital, liquidity, and transparency standards, and oversees them with monthly financial disclosures, independent audits, and robust risk management protocols.
- Stablecoin issuers must also adhere to a regulatory framework under the STABLE Act, which is intended to safeguard further innovation, maintain the US dollar's status as the world's reserve currency, and protect consumers and investors.
- Prior to the STABLE Act, a bipartisan Guiding and Establishing National Innovation (GENIUS) Act was introduced by US senators to regulate stablecoins, promote financial innovation, and establish licensing and reserve requirements for stablecoin issuers.
