Gottheimer drafts stablecoin bill as Congress plots crypto rule revamp

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“The committee’s going to be active this year on this,” he said. “I’m hearing there’s a lot of interest. I talked to the chairwoman [California Democrat Maxine Waters] about it at length. She’s certainly interested. I see a lot of opportunity for action.”

What it means for stablecoins: Gottheimer’s bill represents support for the view that firms issuing stablecoins should be subject to bank-like regulation, an approach recommended by the Treasury Department and other financial agencies. SEC Chair Gary Gensler has said some stablecoins would face regulation as securities and investment companies.

“I don’t see see a stablecoin in this perspective as a security, per se,” Gottheimer said. “It can be used in different transactions. It’s not how I look at it.”

A big concern that regulators have expressed about stablecoins is that they could be subject to runs, with stablecoin holders rushing to redeem their tokens for dollars and creating the risk of broader financial market instability. Gottheimer said his plan would mitigate systemic risks. Some stablecoin firms such as Circle are already seeking bank charters.

Under Gottheimer’s bill, a stablecoin issuer could take on oversight from regulators by operating like a traditional bank with deposit insurance. The alternative option would be to hold reserves at a bank in a segregated account. The reserves would need to have one-to-one reserves in US dollars or “extremely liquid, short-term instruments,” in particular US Treasurys, he said.

Gottheimer’s approach to crypto: “We need to act and provide certainty here if we’re going to lead the way,” he said. “Certainty’s the key to leadership, and I’m worried that right now you’ve got Bermuda and the Bahamas and France and other places drawing investors and currencies because we have not acted with the alacrity that we should.”

“The key is harnessing the innovation while ensuring safety and soundness for investors,” he said.

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