Libra has proposed that they are considering the adoption of fiat-pegged stablecoins instead of national currencies supporting a single token, and they claim that the project is a commodity. However, they may face an obstacle as lawmakers in the U.S. want to introduce a bill which will class stablecoins as securities. This would place Libra under strict regulations, with critics observing that these types of measures will only hinder development in the fintech industry.
Reportedly, two representatives from the state of Texas have put forward the bill appointed as the ‘Managed Stablecoins are Securities Act of 2019’. Their stance is that the responsibility of creating a framework for stablecoins lies with Congress, as they can instil consumer protection this way through the model of securities.
It is likely to strain heavily on stablecoin projects, with a legal expert in the field of cryptocurrency and blockchain weighing in that the bill could cause such regulatory burdens that Libra may be obstructed from operating in the U.S. altogether. The Libra Association have insisted that innovation within the financial services industry does not mean that regulation is neglected. Dante Dispart, Head of Policy and Communications, informed Cointelegraph that, “the Libra payment system is designed from the ground up to serve as a payment infrastructure that can empower billions of people left on the margins of today's networks”.
The trend for instilling regulation for stablecoin projects seems to be spreading, as various institutions across the U.S. and internationally are displaying concerns. Last month, a declaration that any business carrying out stablecoin transactions will have to register as a money services business, came from the Financial Crimes Enforcement Network.
The conversation continues as to whether or not stablecoins are securities, with the U.S. Securities and Exchange Commission using the Howey Test to determine the answer. Lawmakers are taking into consideration consumer protection and they insist that stablecoins be classed as securities, but the Libra Association want to ensure that this does not force creativity in the digital world to disappear.