An official of the U.S. federal government said the government is working with Congress on a stable coin legislation that could be passed by the end of the year.
The President's Working Group on Financial Markets met on June 30 to discuss activities within the stable coin space and future legislation.
The meeting included discussions from regulators and other participants about the nature of stable coins, especially algorithmic stable coin, and how they are offered.
There was a discussion on how efforts could be put together to make sure the stable coin legislation comes into force before the end of the year. The legislative package is expected to give a statutory definition of stable coin and their use upon implementation.
The House Financial Services Committee will introduce this legislation, the official said.
A regulatory package for stable coins was started in November 2021 after a report by the President's Working Group on Financial Markets.
The report by the Biden administration officials called for congressional oversight and a formal market structure to protect investors, issuers, and exchanges. There was legislation that restricts institutions that can issue stable coin.
Gary Gensler, Chair of the U.S Securities and Commissions Chair and a member of the Working Group, said stablecoins should be subject to AML CFT standards. He stated that the legislation should make sure stablecoins are brought under federal regulatory frameworks to achieve this.
It is likely that the proposed stable coin legislation will contain laws that are intended to implement these demands, especially given the recent downturn in the criptocurrency market.
The collapse of TerraUST brought more attention to stablecoins and pushed regulators to have more speed in introducing regulatory frameworks. The algorithmic stable coin, which crashed in May, has had a ripple effect that has affected institutions such as Celsius and Three Arrows Capital.
After the crash, Do Kwon, the CEO of Terraforms Labs, the company behind TerraUST, became the subject of several investigations and allegations. The allegations have resulted in a call for more transparency and accountability about the health of stable coin.