U.S. House Financial Services Committee Publishes Copy of Stablecoin Bill: What is a Stablecoin?

Stay tuned for a hearing on Stable Coin that will be coming up by the 'Digital Assets, Financial Technology and Inclusion Subcommittee'   (Here is the Stablecoin Draft Bill they created. I think it will be discussed more in that meeting.) You can read a solid article on 'Stablecoin Bill is an ‘Extraordinary Moment For the Future of Dollar,’ Says Circle CEO'. Because of way in which the economy is changing and adjusting these new digital currencies/assets will come out to fill the market gap. Expect some debates and discussions. 

The Digital Era is a platform shift over a relatively short time frame (i.e. a Digital Renaissance which the U.S. could capitalize on the shift. These eras are often marked by changes in the way we think and conduct our daily affairs. See the last Renaissance, Science, Technology) That creates a problem in terms of management. Regulation allows the government to have some control over these currencies and ensure they are not being misused or manipulated. Larger central currencies provide higher levels of system management and in turn economic stability (People can argue too little and too much but all in all its necessary for a nation this large.). 

Stablecoins are in the process of being regulated. I'm not sure where the name comes from but I suspect that if they are backed by more tangible assets that is related to the term "stable". It means that a stablecoin is eventually convertible for hard assets of some form or another. (That could probably go through another medium like the dollar but each time you make something dependent on something else dependent on something else you create complexity that can't be managed well when economic shocks and issues occur. I like the concept of the gold standard and/or a modified form of a basket of precious commodities as a currency anchor to hedge inflation and/or decline. Many ways to sort of think about it.)

The World Economic System discusses spill over effects of stablecoin and their definition in 'Understanding the macroeconomic impact of cryptocurrency and stablecoin economics' (WEF, para 9, 2023). The following bold sections are bold:

Stablecoin, on the other hand, is a DLT-based cryptocurrency designed to maintain a stable value relative to another asset. It originated from a demand for a stable monetary unit in distributed ledger applications and is used more frequently for transactions than crypto. 

Fiat-backed stablecoins hold 1:1 reserves of fiat currency and the promise of convertibility.

With regulations actively being considered, it is important to prioritise taking action as soon as possible.

• Policymakers should create an international classification framework with nuanced regulations
• Crypto and stablecoins should be included in monetary and financial statistics
• Governments should coordinate with other governments to mitigate regulatory arbitrage and consider economic projections when designing regulations
• Businesses should proactively work in partnership with regulators when designing business Models