The stablecoin bill is gaining popularity again. What changes will it bring to the industry if it is passed?

Original title: "The Stablecoin Bill is on the rise again, which may cause major changes in the industry"

Original author: Liu Ye Jinghong

The Stablecoin Bill is actually an old topic. The draft was passed as early as the first half of last year, but it was not substantively approved for implementation. I turned it out today because I saw a signal:

Representatives Patrick McHenry and Maxine Waters told Bloomberg News this week that they are "getting approval for the Stablecoin Bill in the short term."

——Bloomberg

Briefly talk about the content of the Stablecoin Bill. The specific content here follows the version of the Stablecoin Bill last year, and there should be no major changes so far:

The first point is that the Federal Reserve is responsible for the supervision of non-bank stablecoins, and if banks and other insured deposit institutions issue stablecoins, they are subject to federal bank supervision. All relevant stablecoin businesses need to be registered with the regulatory authorities, and even overseas companies need to be registered before they can conduct stablecoin business.

The second point is to prohibit the creation of new stablecoins without legal currency support. The draft has a two-year ban, requiring that the issuance, establishment or generation of "non-tangible asset-backed" stablecoins be prohibited within two years. The first to bear the brunt are various algorithmic stablecoins and stablecoins generated by cryptocurrency collateral.

The third point is to allow the government to formulate interoperability standards.

The fourth point is to instruct the Federal Reserve to study the digital dollar.

The re-emergence of the heat of the stablecoin bill this time must be combined with the overall situation. You can understand it by looking back at some major events in 2024.

The first is that the Bitcoin ETF was passed and gained unprecedented heat in the capital market, directly pushing the price to a record high. The second is that the geopolitical war continues to start, causing the price of gold to reach a record high. As well as the US election at the end of this year, the Federal Reserve's interest rate cut expectations, etc.

These events actually prove from the side that although the United States did not directly participate in the war, it has already started the dollar war from a financial perspective. This war is different from the previous financial wars. The United States has discovered and thoroughly studied the blockchain or Web3 industry. While people in other countries use blockchain to transfer funds, the United States has begun to formulate blockchain rules at a higher level.

For the blockchain industry, no matter how sexy the various technologies and stories are, their final destination is to complete transactions, especially transactions with USDT as the trading pair. Therefore, the core function of the stablecoin bill is to redefine the trading pairs of the entire industry.

For some old leeks, they must still have an impression that before 2017, USDT was not actually a mainstream trading pair. In those days, various exchanges basically had their own stable points issued. These stable points are not on the chain, but they are completely 1:1 anchored to RMB in the platform C2C.

Therefore, in the next three to five years, the trading pairs of the entire industry will gradually migrate from USDT to stablecoins that comply with US regulations. For example, Binance has always used USDT as its core trading pair, and then issued BUSD to try to replace USDT, but in 2022, BUSD was directly stopped because it was regulated by the United States. Later, Binance promoted TUSD, which was also regulated by the United States and finally stopped.

Currently, Binance is promoting FDUSD, and FDUSD no longer caters to US regulation, but to Hong Kong regulation. However, since the current Hong Kong stablecoin regulatory laws are not clear, FDUSD is only the issuing institution that complies with Hong Kong regulation, but the FDUSD stablecoin itself is still pending.

So from the perspective of Binance's path to promote stablecoins, it has actually been premeditated to find a substitute for USDT and circumvent US stablecoin regulation, which is a very prescient preparation for a rainy day.

Fantasy moment:

Let's do a thought experiment now, assuming that the stablecoin bill has been approved for implementation, and see what changes will occur in the entire blockchain industry.

The first thing to bear the brunt is that USDT is definitely not in compliance with US legal supervision, so exchanges need to gradually clear out USDT trading pairs. Of course, exchanges can choose not to do US business at all, not accept US users, and block US IPs. But don't forget that there is a key point in the Stablecoin Act. Stablecoins need to be implemented in accordance with the interoperability standards set by the US government. Therefore, if an exchange completely cuts off US business, it will lag behind other exchanges in stablecoin support.

What if this exchange chooses to unilaterally support compliant stablecoins, but does not support US business and does not accept supervision? Sorry, that won't work. Because another key point of the Stablecoin Act is that even overseas companies need to register and accept supervision in the United States, otherwise they are also non-compliant.

What if you force yourself to do this business even if it is non-compliant? As mentioned earlier, "stablecoins need to be implemented in accordance with the interoperability standards set by the US government." US regulators are likely to directly freeze your address, or directly ban your entity-related assets according to the provisions of OFAC.

Look, this forms an American closed loop.

Under such a fantasy deduction, the entire industry should be divided into two categories, one is the compliant exchanges that actively embrace US regulation, and the other is the gray area exchanges that are forced to continue to use USDT.

But continuing to use USDT is not a better choice. Don't forget that USDT's parent company Tether is a compliant company in Hong Kong. Hong Kong also has to implement its own stable currency bill, and because Hong Kong will be regulated by the National Security Law, it seems that it may be worse under this framework?

From blocks to trading pairs:

As early as last year, the Bitcoin mining pool F2Pool admitted to filtering transactions from Bitcoin addresses marked by the Office of Foreign Assets Control (OFAC). Not to mention Coinbase, the custodian of the Bitcoin ETF, it must have actively responded to the call.

As for the topic of Ethereum ETF, which is about to be hyped, the PoS validator nodes based in the United States will certainly follow the rules of OFAC.

The stablecoin bill is actually a general falling from the atmosphere of the United States. This move will directly strangle the lifeblood of the entire blockchain industry. It can be foreseen that in the next few years, the entire blockchain industry, whether from the lowest-level blocks or the largest trading pairs, will be restricted by the United States and will be within the scope of its long-arm jurisdiction.

In addition, the recently popular RWA track is led by BlackRock, so all kinds of assets derived from RWA are bound to be within the jurisdiction of the United States.

Finally, although the digital RMB has been promoted in China for a long time, it is actually not the same as the digital dollar or the compliant stablecoin, both of which just have digital features, that's all.

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