Calls for Stablecoin Regulation Growing- Regulations Weekly

Stablecoin Legislation

Congress was called upon on Monday in a 22-page report, issued by the Treasury Department, to reign in stablecoins.

As an important cog in the overall digital asset sector, stablecoins have experienced a meteoric rise over the past few years.  Originally a niche product consisting primarily of Tether, the market is now littered with options from USDC to GUSD and more.  As made evident through the aforementioned report, this rise in popularity has brought stablecoins squarely in front of regulators.

In its report, various legislative recommendations are made, including but not limited to the following.

• ‘Require stablecoin issues to be insured depository institutions’
• ‘Require custodial wallet providers to be subject to appropriate federal oversight’
• ‘Require stablecoin issuers to comply with activities restrictions that limit affiliation with commercial entities’

While no official rulings have yet been made, any forthcoming decision has the potential to cause waves throughout the entire digital asset market.  Needless to say, all eyes will be on the treatment of stablecoins moving forward.

Product Filings

If regulators didn’t have their hands full before with all the Bitcoin related ETF filings, they certainly will now.  With the recent approval and launch of two Bitcoin Futures based ETFs in the United States, various other companies have now submitted their own proposals for similar products.

In the United States, the SEC is being asked to make an amendment to existing rules, and approve a NYSE Arca Bitwise Bitcoin ETP Trust.

In its filing, the company states that, “…the investment objective of the Trust is to seek to provide exposure to the value of bitcoin held by the Trust, less the expenses of the Trust’s operations. In seeking to achieve its investment objective, the Trust will hold bitcoin and establish its Net Asset Value (“NAV”) at the end of every business day by reference to the CF Bitcoin-Dollar US Settlement Price (“CME US Reference Rate”).

Under normal circumstances, the Trust’s only asset will be bitcoin, and, under limited circumstances, cash. The Trust will not use derivatives that may subject the Trust to counterparty and credit risks.”

Meanwhile, in Hong Kong the Securities and Futures Commission (SFC) has been inundated with requests to approve a Bitcoin ETF.  This was confirmed at a recent conference in which SFC Deputy CEO Julia Leung touched upon considerations being mulled over by the regulators – namely accessibility to such products.

With crypto-based exchange listed offerings now available in a variety of nations, it is unsurprising to see an increasing amount of regulatory bodies considering this course of action.

Hashlets Deemed ‘Not Securities’

In what is believed to be a first in the United States, a jury has just deliberated on the status of certain digital assets as securities.  While the case, which dated back to 2016, did indeed involve instances of fraud, the jury found that various digital assets sold to investors by the defendants were not securities.

These digital assets, which were known as Hashlets, Hashpoints, Paycoin, and Hashstakers, represented proportional shares to hashing power in the mining operations of GAW Miners.

While the case itself may not be breaking news, the ruling is an interesting one, as it not only sets a precedent, but highlights the general public’s perception of such products.