Revamped Legislation Aims to Regulate Stablecoins
The US House of Representatives recently introduced an updated version of the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, with significant changes made from the initial draft. The revised legislation aims to bring regulation to payment stablecoins, enhance compliance mechanisms, increase oversight powers, and provide clarity on key definitions related to dollar-backed digital assets.
New Framework for Stablecoin Issuance
The STABLE Act of 2025, introduced by Representatives Bryan Steil (R-WI) and French Hill (R-AR), seeks to establish a federal framework for the issuance of payment stablecoins. The bill categorizes qualified issuers into federally supervised institutions, nonbank entities approved by the Comptroller, and state-approved entities operating under certified regimes.
Key Changes in the Updated Version
- The updated bill excludes financial products like securities, deposits, and credit union accounts from the definition of “payment stablecoin,” providing clarity for developers and institutions.
- Monthly reserve attestations verified by registered public accounting firms are now mandatory, with certification requirements for chief executive and financial officers to ensure accuracy.
- Criminal penalties of up to $1 million in fines or 10 years in prison may be imposed for submitting false certifications.
- Procedures for reviewing and approving new stablecoin issuers have been detailed, including decision deadlines for regulators, appeal rights, and reapplication processes after denial.
- Regulators are required to submit annual reports to Congress on the status of pending applications.
Rulemaking and Industry Alignment
The updated legislation mandates regulators to begin rulemaking within 180 days of enactment to define application requirements and expedite approval for well-capitalized entities. It also ensures protection for issuers using public, decentralized networks and clarifies that such design choices will not lead to denial of applications.
Additional Provisions for Consumer Protection
- Strict reserve standards are imposed on stablecoin issuers, mandating full backing by cash-equivalent assets like Treasury bills or demand deposits.
- Issuers are prohibited from offering yield to token holders and are restricted to core functions such as issuance, redemption, and custody services.
- Consumer protection measures include clarifications that the US government does not insure stablecoins and penalties for misrepresentation.
The March 26 revision of the STABLE Act signals bipartisan support for formalizing stablecoin regulation and adapting financial policies to accommodate blockchain-native payment systems. The legislation reflects a growing responsiveness to the needs of developers and institutions operating in the intersection of fintech and traditional banking. The House Financial Services Committee is expected to review the bill in the near future, allowing for further discussion and potential amendments.
