US Representative Introduces Bill To Establish Government-backed Insurance For Stablecoins

Josh Gottheimer, a US Representative from New Jersey, presented a measure on February 15 that would offer government-backed insurance for stablecoins in the same way that it does for fiat deposits.

Gottheimer advocated identifying stablecoins generated by certified financial institutions or some nonbank issuers as “qualified” in a draught of the Stablecoin Innovation and Protection Act of 2022 unveiled on Tuesday. The bill indicates that “qualified stablecoins” are neither securities nor commodities under US law, and are redeemable on desire from the issuer under this definition. This would also qualify specific stablecoins, allowing them redeemable for US dollars one-to-one.

The law would require the Federal Deposit Insurance Corporation, or FDIC, to establish a Qualified Stablecoin Insurance Fund in the situation of nonbank issuers, ensuring that eligible stablecoin holders can swap their tokens for US dollars on desire. The bill is intended to protect holders from “systemic risk, forgery, and illicit financing,” according to Gottheimer.

Aside from the insurance regulations, the Office of the Comptroller of the Currency will essentially have regulatory responsibility over stablecoin issuers, determining standards and regulations.

The bill proposed the following:
•It would designate as certified stablecoins those issued by insured depository institutions or certain non-banking firms.
•The primary goal of the bill is to safeguard users from deceptive techniques and illicit financing.