The House Committee on Financial Services has announced that the markup session for the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act will occur on April 2.
This session will evaluate the Amendment in the Nature of a Substitute (ANS), which is a revised iteration of the bill first presented on March 26. The new version clarifies definitions, enhances compliance measures, and specifies criteria for issuer eligibility.
Furthermore, the legislation maintains provisions that ban the issuance of yield-bearing stablecoins, a point of contention among supporters who believe this ban should be lifted.
Prohibition of yield-bearing stablecoins
It categorizes qualified issuers into federally regulated institutions, nonbank entities authorized by the Comptroller of the Currency, and state-regulated entities operating under approved frameworks.
The STABLE Act, spearheaded by Representatives Bryan Steil (R-WI) and French Hill (R-AR), seeks to establish a detailed federal structure for the regulation of payment stablecoins.
Despite the revisions, the ANS still includes prohibitive language against yield-bearing stablecoins, which has sparked considerable debate within the industry.
This prohibition affects stablecoins that provide interest from reserve assets, a characteristic some stakeholders consider vital for user engagement and economic functionality.
Advocates of the bill argue that this restriction stems from investor protection concerns and the need for regulatory clarity, as interest-bearing instruments could be governed by current securities regulations.
Coinbase’s CEO Brian Armstrong voiced his support for the inclusion of on-chain interest features on March 31, asserting that banning yield-bearing stablecoins limits users’ access to competitive financial products.
Expanding access
Armstrong highlighted that stablecoins backed by short-term US Treasuries could enable users to earn interest directly, akin to an interest-bearing checking account, without necessitating the issuer to operate as a bank.
He referenced Federal Reserve data indicating that in 2024, the average interest rate on consumer savings accounts was merely 0.41%, in stark contrast to a 4.75% federal funds rate. This disparity results in considerable erosion of purchasing power due to inflation and costly financial intermediation.
Armstrong argued that on-chain interest facilitates wider access to better yields and allows stablecoin holders to preserve more value from their underlying reserves.
He also noted that consumers in underbanked areas worldwide could reap the benefits of stablecoins as dollar-denominated interest-bearing assets.
In his perspective, banning on-chain interest diminishes the advantages of financial inclusion, transparency, and immediate accessibility that stablecoins provide.
Despite initial opposition, it remains possible that amendments to eliminate this restriction may be proposed and discussed during the markup session.
Mentioned in this article
