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I'm thrilled to share the announcement of @RashidaTlaib's new "Stablecoin Tethering & Bank Licensing Enforcement (STABLE) Act", ( #STABLEAct) cosponsored by @ChuyForCongress & Chair of the House Financial Services Committee's Fintech Task Force, @RepLynch. https://tlaib.house.gov/media/press-releases/tlaib-garcia-and-lynch-stableact
The full text can be found here:
https://tlaib.house.gov/sites/tlaib.house.gov/files/STABLEAct.pdf
A big shoutout to @RaulACarrillo & @jason_vtf, who also worked on the bill, & most of all, to the fantastic @chastitycmurphy, who has led the effort on this & other fintech bills such as the #ABCAct and #PublicBankingAct.
https://tlaib.house.gov/sites/tlaib.house.gov/files/STABLEAct.pdf
A big shoutout to @RaulACarrillo & @jason_vtf, who also worked on the bill, & most of all, to the fantastic @chastitycmurphy, who has led the effort on this & other fintech bills such as the #ABCAct and #PublicBankingAct.
A big thanks also to @RealBankReform, @ConsumerReports, and @LPE_Project for their endorsement and input on the bill. This is a complex and technical area of financial regulation, and it's critical to ensure consumer voices and interests are represented in the lawmaking process.
The #STABLEAct builds on the work and insights of law & finance scholars such as @MorganRicks1, @rch371, @STOmarova, @KatharinaPistor, @DanAwrey, and Arthur Wilmarth, and seeks to clarify and affirm the relationship between stablecoins and existing banking/depository law.
I will share a detailed explanation soon, but in the meantime, the bill has two primary purposes: 1) unequivocally defining stablecoins as deposits under federal law, and 2) requiring any entity seeking to issue stablecoins to obtain a banking license & prior regulatory approval.
In this respect, it aims to address a longstanding gap in banking law with respect to the definition of 'deposits', which as @MorganRicks1 has argued in his book 'The Money Problem', is a major factor contributing to shadow-money instability: https://corpgov.law.harvard.edu/2016/03/15/the-money-problem-rethinking-financial-regulation/
One last note: while this bill is aimed squarely at efforts by tech companies like Facebook to enter the digital payments space with its formerly-Libra-now-Diem project (see: https://www.ft.com/content/cfe4ca11-139a-4d4e-8a65-b3be3a0166be), as well as acting Comptroller of the @USOCC, @BrianBrooksOCC's recent moves to
unilaterally extend special-purpose 'payments charters' to non-bank financial institutions without first obtaining Congressional approval, it is written such as to apply to a wide range of monetary activities currently undertaken by actors with insufficient regulatory supervision
and in that respect sets a clear marker for progressives in how to think about a broad range of financial regulatory issues, including how best to prevent the kinds of systemic 'shadow banking' risks that led to the global financial crisis of 2007-2008.
I'd also note that while proper regulation of privately-issued stablecoins is critical to preserve systemic stability and avoid repeating the mistakes of the past, it is no substitute for a genuine public digital payments system, as I argued here: https://www.thenation.com/article/archive/facebook-libra-currency-digital/
As @AyannaPressley noted in a hearing with Libra's head, David Marcus, last July, the only reason Facebook is even entering this space is because the federal government has failed to provide a safe, secure digital payments system that the public trusts. https://twitter.com/rohangrey/status/1151534083744370699
