Why the STABLE Act is as Useful as a Screen Door on a Submarine! ðŸšĒðŸ’Ļ

by

Well now, gather ’round, folks! It seems the crypto enthusiasts are all a-twitter about the prospect of clearer regulations under the Trump administration. They’re hollering for a sense of urgency, like a cat in a room full of rocking chairs, to roll back the heavy-handed tactics of the previous regime. ðŸąðŸ’Ļ

This ruckus was raised during a hearing on the 11th of February, where the US House Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence heard from five witnesses who surely had more opinions than a cat has lives.

First up was Jonathan Jachym, the deputy general counsel at Kraken, who was as eager as a dog with two tails to discuss the need for “fundamental rules for centralized intermediaries.” He suggested that Congress ought to hand over the reins to the Commodity Futures Trading Commission (CFTC) to keep a watchful eye on the digital commodities market. ðŸķ

“We must avoid the blunt application of centralized rulebooks to decentralized protocols,” he declared, as if he were trying to fit a square peg in a round hole. Ain’t that a pickle?

Next in line was Ji Hun Kim, the president and acting CEO of the Crypto Council for Innovation, who echoed Jachym’s sentiments like a parrot in a pirate’s den. Despite some progress under President Trump, he lamented that “more still needs to be done” to untangle the mess left by the previous administration. ðŸĶœ

“During Chairman Gensler’s reign, the SEC launched over 125 enforcement actions related to digital assets but offered no clear guidance on what constitutes a security,” Kim lamented, shaking his head as if he’d just seen a chicken trying to cross the road.

STABLE Act misses the mark

On February 5, House Financial Services Committee Chair French Hill and Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee Chair Bryan Steil unveiled a draft of the STABLE Act. This bill aims to provide clearer guidance for stablecoin issuers, but it seems to have missed the mark like a blindfolded archer at a county fair. ðŸŽŊ

Former CFTC Chair Timothy Massad, now a director at Harvard’s Kennedy School of Government, called stablecoins “the most useful application of blockchain technology to date.” But he was quick to point out that the STABLE Act is about as effective as a chocolate teapot in several respects:

“The STABLE Act has many features I support, such as full reserves for tokens, but it’s weaker than a wet noodle compared to what was negotiated last fall.”

Massad raised five issues with the proposed legislation. First, it creates “far too much risk of weak state standards” because there’s no ongoing federal supervision of state issuers. Sounds like a recipe for disaster, doesn’t it?

Secondly, the legislation doesn’t say what happens if a stablecoin issuer goes belly up. And thirdly, it doesn’t do enough to tackle the risks of financial crime and evasion of sanctions. Talk about leaving the barn door wide open! ðŸī

The fourth issue? The STABLE Act might not have much impact on Tether, the company behind the $140 billion USDt stablecoin. “It’s unlawful to issue a stablecoin that isn’t chartered, but there’s no enforcement mechanism,” Massad pointed out, scratching his head in disbelief.

Lastly, the act “doesn’t give regulators enough authority and discretion,” he said, as if predicting that stablecoins could evolve in ways that would make even the best fortune teller scratch their head.

Stablecoins, including USDt, Circle’s USD Coin (USDC), PayPal USD (PYUSD), and others, are collectively valued at a

2025-02-12 01:16