The Stablecoin Transparency Act would require stablecoins to be fully backed by dollars or short-term government securities.
Stablecoin issuers would also have to publish audited reports.
Remember the whole hubbub about Tether only kinda sorta being backed by the U.S. dollar?
Two legislators—Rep. Trey Hollingsworth (R-IN) in the House and Sen. Bill Hagerty (R-TN) in the upper chamber—have introduced a bill designed to make sure that’s never an issue again.
The Stablecoin Transparency Act would require stablecoins to be fully backed by a combination of U.S. dollars and “government securities with maturities less than 12 months” (i.e., bonds). It would also legally compel issuers of stablecoins—such as Circle (USDC) and Tether (USDT)—to regularly publish audited reports demonstrating their reserves.
“From whether coins are securities or commodities, to who is in charge of regulating them, those in the cryptocurrency marketplace are navigating significant ambiguity,” says Sen. Hagerty, empathizing with consumers eager to know their funds are safe.
Stablecoins are crypto assets pegged 1:1 with a fiat currency, often the U.S. dollar. The idea is that for every stablecoin in circulation, there’s a $1 bill in the bank; if anyone wants to redeem that coin, they can.
But the New York Attorney General’s Office took Tether to task for spreading this perception, stating that “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.” Instead, when Tether ultimately issued reports in 2021, they showed a sizable…