Stablecoin regulation bill draft released, multiple tokens may face risks

Recently, U.S. regulatory agencies have adopted an increasingly strict attitude towards the regulation of stablecoins. Following the collapse of the Terra/UST stablecoin system, U.S. lawmakers have intensified their focus on this area. The latest news indicates that the U.S. House of Representatives has introduced a draft stablecoin bill, which includes a ban on certain types of stablecoins.

The draft bill explicitly prohibits the issuance or creation of new "endogenous collateral stablecoins." The definition of this type of stablecoin is: a Token that can be converted, redeemed, or repurchased at a fixed monetary value, and primarily relies on other digital assets from the same issuer to maintain its fixed price.

Endogenous collateral stablecoins typically use collateral created by the project itself (such as governance tokens) to issue stablecoins. This mechanism can lead to a spiral increase in the price of collateral and the number of stablecoins during a bull market, while it can trigger liquidation and a death spiral during a bear market. The collapse of Terra/UST is a typical case.

According to the current draft content, various types of stablecoins may face regulatory risks:

1. Over-collateralized stablecoins: Such as sUSD, aUSD, and other stablecoins that use the project's own governance tokens as collateral. Although they employ an over-collateralization mechanism, they may still fit the definition of "endogenous collateral stablecoins."

2. Stablecoins with mechanisms similar to Terra: Stablecoins like USDN that adopt mechanisms similar to Terra rely on other tokens issued by the project to maintain their value and may face significant regulatory risks.

3. Some algorithmic stablecoins: such as Frax, although the collateral rate is currently high, the fact that it includes an algorithmic component in its mechanism may also make it subject to the provisions of the bill.

For traditional fiat-collateralized stablecoins, this legislation provides a legal issuance channel. Banks or credit unions can issue their own stablecoins under the supervision of the relevant regulatory authorities. Non-bank institutions can also apply to issue stablecoins through the process established by the Federal Reserve.

It is worth noting that for stablecoins (such as DAI and LUSD) collateralized by decentralized assets (such as ETH), their legality is not clearly defined in the current draft. The regulatory status of these stablecoins remains to be further clarified.

Overall, this bill draft takes a relatively strict stance on decentralized stablecoins, particularly endogenous collateral stablecoins. As for centralized stablecoins, it clarifies the regulatory agencies and issuance channels. However, this bill is still in the draft stage, and the final version may undergo adjustments. Specific implementation will take some time, and we will continue to monitor the relevant progress.