The regulatory bottleneck in the U.S. is not about to go away, as there are fresh concerns about the understanding of regulations guiding digital assets. Just recently, the stablecoin regulation act in the US Congressed has tried to distinguish between centralized and decentralized projects when it comes to regulation.
There has been a lot of discussions in the crypto space when it comes to the present act to regulate stablecoins in the U.S. The main point of discussion for many in the industry is the act that proves an additional decentralized option needs to be developed. As it stands, it is believed that anything that is centralized remotely will not see the light of the day because of regulation.
Most decentralized platforms and frameworks are less likely to be regulated compared to centralized platforms.
The act may make decentralized options more eye-catching
According to Eric Conner, a product researcher at Blockchain startup Gnosis, That’s the reason many stakeholders prefer permissionless and decentralized finance down the whole stack.
This is why it’s imperative to focus on *truly* decentralized and permissionless finance down the entire stack.
Any centralized points of failure will be stifled by regulation written by those who do not understand what we are building. https://t.co/RGrdfx51L1
— Eric Conner (@econoar) December 3, 2020
“Any centralized points of failure will be stifled by a regulation written by those who do not understand what we are building,” he reiterated.
Another Bitcoin proponent, Andreas Antonopoulos, said that the act will not be enacted. However, the most interesting part is the fact that its implementation will only occur by definition to the centralized fiat backend stablecoins. As a result, it will make decentralized options more eye-catching for the industry.
The Act proposes certain restrictions
Earlier in the week, U.S. Congresswoman Rashida Tlaib introduced what is now known as “Stablecoin Tethering and Bank Licensing Enforcement (STABLE), also called the “Stablecoins Classification and Regulation Act 2020.
Based on the announcement, the act will offer protection for consumers who are at risk of the emerging digital payment instruments like Facebook’s Libra as well as other stablecoins. The act will protect the interest of the investors who may want to invest based on unfounded promises from the asset founders and developers.
The announcement also noted that the act will regulate the issuance of digital assets and related commercial activities, which has become very important during the COVID-19 pandemic.
However, it’s important for both the present and future stablecoin issuers who want to carry out business in the United States. They must get a banking charter and get approval from the Federal Deposit Insurance Corporation (FDIC).
Nevertheless, other stakeholders such as the Chief Strategy Officer at CoinSghares Meltem Demirors, argued that the act has the wrong effect on the further growth and development of the digital asset industry.
The Facebook Libra is also facing stiff opposition from regulatory bodies, as the regulators argued that the Libra may constitute a major setback for nations’ financial instruments. As a result, the Libra Association has changed its name to the “Diem Association”. Libra has also been changed to “Diem” in a bid to soften the minds of the regulators.
