US lawmaker introduces bill for government-backed insurance of 'qualified' stablecoins

cointelegraph.com:

House Financial Services Committee member and New Jersey Representative Josh Gottheimer has introduced legislation which would have the Federal Deposit Insurance Corporation back stablecoins in a similar manner to fiat deposits.

In a draft of the Stablecoin Innovation and Protection Act of 2022 released on Tuesday, Gottheimer proposed labeling stablecoins issued by insured depository institutions or certain nonbank issuers as “qualified.” Under this definition, the bill suggests “qualified stablecoins” are neither securities or commodities under U.S. law, and redeemable on demand from the issuer.

In cases of nonbank issuers, the legislation would require the Federal Deposit Insurance Corporation, or FDIC, to set up a Qualified Stablecoin Insurance Fund to insure qualified stablecoin holders can exchange their tokens for U.S. dollars on demand. According to Gottheimer, the bill is aimed at protecting holders from “systemic risk, fraud, and illicit financing.”

“The expansion of cryptocurrency offers tremendous potential value for our economy," said Gottheimer. "But for cryptocurrency to grow and thrive here in the United States, instead of overseas, we must provide more direction and certainty to the marketplace to help boost innovation and protect consumers."

He added:

In addition to the insurance requirements, the Office of the Comptroller of the Currency will largely have the regulatory authority to determine standards and requirements for stablecoin issuers. However, Gottheimer specified that the legislation’s regulatory purview was not intended to extend beyond these qualified stablecoins — the Securities and Exchange Commission and Commodities Futures Trading Commission are “not restricted from examining non-qualified