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1 1 (June 9, 2022)

handle is hein.crs/govefwe0001 and id is 1 raw text is: Congressional S£ Research Service Stablecoins: Legal Issues and Regulatory Options (Part 2) June 9, 2022 As discussed in the first part of this two-part Legal Sidebar series, stablecoins are cryptocurrencies whose value is pegged to a reference asset like the U.S. dollar. While stablecoin issuers attempt to maintain these pegs in different ways, most of the regulatory attention has focused on coins that are putatively backed with reserves of assets denominated in fiat currency. Often, those assets underwrite an issuer's commitment to redeem its stablecoins for a fixed value upon demand. That structure raises familiar risks. Like banks and money market mutual funds (MMFs), stablecoin issuers are vulnerable to runs if their customers lose faith in the adequacy of the assets backing their demandable liabilities. Unlike banks and MMFs, however, most stablecoin issuers are not subject to federal regulations and protections designed to instill faith in those liabilities, such as deposit insurance and portfolio restrictions. In November 2021, the President's Working Group on Financial Markets (PWG) recommended that Congress enact legislation limiting stablecoin issuance to insured depository institutions. Other commentators have advocated different regulatory strategies, ranging from a bespoke federal licensing regime to an outright ban on stablecoin issuance. This Legal Sidebar-the second in a two-part series-explores regulatory options for stablecoins. The first part of the Sidebar series provides an overview of the existing legal framework governing stablecoins. Options for Congress and Regulators Commentators have proposed a broad range of measures that Congress and federal regulators could take to address the possible risks and benefits of stablecoins. Bank Regulation As noted, the PWG has recommended that Congress adopt legislation limiting stablecoin issuance to insured depository institutions. Several lawmakers in the 116th Congress sponsored legislation that would Congressional Research Service https://crsreports.congress.gov LSB10754 CRS Legal Sidebar Prepared for Members and Committees of Congress

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