Main Points:
- The U.S. House of Representatives submitted the latest revision of the STABLE Act, a bill designed to regulate payment stablecoins and establish new compliance standards for digital assets.
- Key changes include excluding financial products such as securities, deposit accounts, and credit union accounts from the definition of “payment stablecoins” and prohibiting interest-bearing tokens.
- The revised bill requires certified public accounting firms to verify the monthly reserve proofs for stablecoin issuers, with severe penalties for fraudulent certifications.
- Stablecoin issuers must fully back their tokens with cash-equivalent assets like U.S. Treasuries, and they are barred from paying yields to token holders.
- The legislation also includes provisions to prevent false claims regarding government guarantees for stablecoins and details on anti-money laundering, economic sanctions, record keeping, monitoring, and reporting.
- The revised STABLE Act is aimed at clarifying the rules for issuing and using U.S. dollar-backed digital assets, with a goal of obtaining presidential approval by the end of April, following Senate progress on the complementary GENIUS Act.
I. Modernizing Digital Asset Regulation
On March 26, the U.S. House of Representatives advanced the latest revision of the STABLE Act—a bill focused on regulating payment stablecoins and introducing stringent compliance measures for digital asset issuance and usage. Co-sponsored by Republican lawmakers including French Hill and Brian Steele, the revised legislation seeks to secure the U.S. dollar’s supremacy by ensuring that stablecoins, which are pegged to the dollar, are managed transparently and safely. With a strong emphasis on consumer protection and robust risk management, the bill marks a significant step forward in the integration of digital assets into the broader financial system.
II. Key Revisions in the STABLE Act
A. Redefining “Payment Stablecoins”
One of the most notable changes in the revised bill is the exclusion of certain financial products from the definition of “payment stablecoins.” Specifically, securities, deposit accounts, and credit union accounts are no longer considered part of this definition. This narrowing of scope focuses regulatory attention on digital assets that are used directly for payments, ensuring that these tokens are strictly tied to fiat value.
B. Enhanced Reserve Verification and Penalties
The updated legislation mandates that a certified public accounting firm must verify the monthly reserve proofs of stablecoin issuers. This measure is intended to guarantee that the digital assets are fully backed by cash-equivalent assets, such as U.S. Treasuries. The bill imposes severe penalties—including fines of up to $1 million (approximately 150 million yen) or up to 10 years in prison—on any party that deliberately submits false certification documents.
C. Restrictions on Yield Payments
To prevent conflicts with the objective of maintaining stable value, the revised STABLE Act prohibits stablecoin issuers from paying yields or interest to token holders. Instead, issuers are restricted to providing services such as issuance, redemption, and custody. This aligns with the goal of ensuring that stablecoins serve as a reliable medium of exchange rather than an investment product offering speculative returns.
D. Consumer Protection and Transparency
The bill also includes provisions to ensure that consumers are not misled about the nature of stablecoins. It explicitly states that the U.S. government does not guarantee these digital assets and prohibits any false representations to that effect. Additionally, the legislation outlines comprehensive requirements for anti-money laundering measures, economic sanctions compliance, record keeping, monitoring, and reporting, reinforcing the overall regulatory framework.
III. Legislative Context and Next Steps
The revised STABLE Act is part of a broader legislative effort to modernize the regulatory environment for digital assets in the United States. Meanwhile, the Senate has already moved forward with the “GENIUS Act,” which was approved by the banking committee with an 18-6 vote. The next steps involve presenting the revised bill on the Senate floor and then integrating it with the House version. The ultimate goal is to secure the President’s signature by the end of April, thereby solidifying a comprehensive regulatory framework for U.S. dollar–backed stablecoins.
These legislative efforts are designed not only to protect consumers and ensure financial stability but also to position U.S. stablecoins as reliable instruments for payments and digital finance. Notably, the exclusion of tokens that pay interest and tokenized deposits from the definition of payment stablecoins underscores the focus on preserving the intrinsic stability of these digital assets.
IV. Implications for the Market and Future Trends
The revised STABLE Act is expected to have wide-ranging implications:
- For Issuers: Stablecoin issuers will face stricter requirements to prove that their tokens are fully backed by cash-equivalent assets, enhancing trust and transparency in the market.
- For Investors: The prohibition on interest payments reinforces the view of stablecoins as reliable mediums of exchange rather than investment vehicles, potentially bolstering confidence in their stability.
- For the Financial Industry: As regulatory clarity improves, banks and other financial institutions may increasingly adopt stablecoins for interbank settlements and other transactional purposes, provided they meet the new standards.
- For the Global Market: This legislation is part of a global trend toward integrating digital assets into the traditional financial system, setting a precedent that may influence regulatory approaches in other jurisdictions.
V. A Landmark Step in Digital Asset Regulation
In conclusion, the revised STABLE Act represents a landmark moment in U.S. financial regulation, aiming to bring clarity, security, and accountability to the realm of payment stablecoins. By excluding certain financial instruments from its definition, enforcing strict reserve verification, and prohibiting yield payments, the bill is designed to ensure that U.S. dollar–backed digital assets remain stable and reliable. With the Senate and House working towards integration and presidential approval by the end of April, this legislative package could set a global standard for digital asset regulation, fostering innovation while safeguarding the financial system.
