The Clarity for Payment Stablecoins Act of 2023, officially known as H.R. 4766, is a bill introduced in the 118th Congress, 1st Session, by Mr. McHenry. Its purpose is to establish regulations for payment stablecoins, which are digital assets designed for use as a means of payment or settlement. ^[1][6]

Overview

The Act, passed on July 27, 2023, seeks to provide clear guidelines and oversight for payment stablecoins, which are digital assets designed for use as a means of payment or settlement. These stablecoins are intended to maintain a stable value relative to a fixed amount of monetary value, making them attractive for everyday transactions and as a store of value amidst the volatile nature of cryptocurrencies. ^[1][2][5]

The Act imposes certain requirements on permitted payment stablecoin issuers, including maintaining reserves to back outstanding payment stablecoins, publicly disclosing their redemption policy, establishing procedures for timely redemptions, and publishing monthly compositions of their reserves. Reserves held by issuers cannot be pledged, rehypothecated, or reused, except for creating liquidity to meet redemption requests. The bill also introduces capital, liquidity, and risk management requirements applicable to permitted payment stablecoin issuers. ^[1][2][6]

Criticism

The Stablecoin Bill has faced contention and a lack of bipartisan support. The bill's advancement was marked by disagreements between Republican and Democratic lawmakers, with Chair Patrick McHenry (R-N.C.) attributing the lack of a bipartisan deal to objections from the White House. ^[1][3]

Key Democratic lawmakers, including Maxine Waters (D-Calif.), have expressed concerns about the bill. They argue that it could lead to a race to the bottom by creating various licenses for issuers, potentially enabling large corporations to issue stablecoins and manage monetary reserves. The bill's provisions related to the role of federal regulators, especially the Federal Reserve's enforcement and supervisory reach, have been subject to scrutiny. ^[1][2][4]

In response to the Clarity for Payment Stablecoins Act of 2023, the North American Securities Administrators Association (NASAA) have also expressed concerns and opposition to the proposed legislation. As an organization dedicated to protecting investors, NASAA opposes excluding payment stablecoins from federal securities regulation, asserting that they should be subject to such regulations to ensure adequate investor protection. ^[2]