"Waters' Bill: Tightening Grip on Stablecoins, Boosting Consumer Protection"
1min read Congresswoman Maxine Waters has proposed a bill aimed at regulating stablecoin issuers in the United States, focusing on consumer protection and compliance. The legislation, unveiled on February 10, seeks to establish a robust regulatory framework for stablecoins, which are digital assets pegged to the value of a stable asset like the US dollar.
The bill emphasizes strict compliance measures, mandating that all stablecoins are backed one-to-one by secure reserves such as US currency or Treasury bills. Key highlights include provisions for Federal Reserve oversight and strict anti-money laundering compliance, ensuring protection against financial crimes.
The proposed bill outlines a licensing and regulatory framework for payment stablecoin issuers, differentiating between requirements for nonbank and bank issuers. A pivotal aspect of this legislation is the role of the Federal Reserve, which would oversee stablecoin operations to ensure adherence to newly defined regulations.
Importantly, the bill stipulates that all stablecoin issuers must maintain 100% reserves, consisting of widely acknowledged secure assets. This also includes provisions to prohibit unauthorized issuers from operating within the United States, implementing substantial penalties for any violators.
The bill goes further by including comprehensive consumer protection measures, specifically banning non-financial companies from owning stablecoin issuers. This is aimed at maintaining a clear division between banking and commerce, which is central to regulatory integrity.
Moreover, all stablecoin issuers are required to comply with stringent anti-money laundering (AML) and counter-terrorism financing (CTF) laws, ensuring that their operations do not facilitate illicit activities. This includes compliance with U.S. sanctions laws.
Individuals previously convicted of specific financial crimes will also find themselves barred from holding significant positions within these companies, aligning with broader goals of financial reform and consumer protection.
The Federal Reserve would be empowered to enforce these regulations, while existing agencies such as the Treasury Department, Consumer Financial Protection Bureau (CFPB), Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC) would maintain supervisory roles across activities involving stablecoins, exchanges, and other intermediaries.
This legislation has received input from bipartisan congressional staff, underlining its collaborative origin and reinforcing its aim as a balanced approach to stablecoin regulation.
“This draft bill fosters innovation, while properly addressing and prioritizing concerns I have long held about safeguarding our 
