US policymakers are discussing what regulation should be applied to stablecoins.
Despite the fact that, for example, Tether (USDT) has existed for several years now, American regulators are only now taking action to deal with what they believe to be the main problem: Libra.
A few days ago the bill “Stablecoins are Securities Act of 2019” was officially presented, which addresses the need to find a solution to bring the Facebook stablecoin project into the legality framework, and indeed to control its possible impacts on monetary policies.
The very idea represented in the title of the bill, namely that stablecoins are securities (and not coins), is puzzling.
According to the creators of this bill, the digital assets involved, known as stablecoins, are in fact investment contracts, and therefore securities within the meaning of the Securities Act of 1933.
To tell the truth, the bill itself reports that there are doubts about this interpretation, and leaves to Congress the task of defining the meaning of the very definition of “managed stablecoins” in order to clarify which digital assets fall into this case.
In the past, the Swiss FINMA has already intervened on this subject and has already decided in a sufficiently clear way to distinguish which stablecoins are to be considered securities and which are not. For example, according to Swiss law, a stablecoin that represents the ownership of an asset, such as gold, and is convertible into the asset itself, should not be considered a security.
The bill presented to the American Congress, on the other hand, does not seem to make any distinction, and therefore creates some confusion. Its promoters may not be aware that Switzerland has already made timely and precise decisions on this matter, even though the Libra Association itself is based in Switzerland.
During Mark Zuckerberg’s hearing a few days ago, in front of the United States House Committee on Financial Services, a deputy explicitly asked the CEO of Facebook why Switzerland had been chosen as the headquarters of Libra, and taking into account what was proposed by the Stablecoins are Securities Act of 2019, the answer now seems clear: not only the American regulators have lagged behind, but they also seem to have rather confused ideas.
If the Americans do not want to miss the opportunity to keep on their territory activities similar to Tether or Libra, which instead have already chosen to migrate to other shores, they should take example from those countries that have chosen to accept these new challenges, in order to ride the wave rather than try to contain it, in vain. If they decide not to do so, other countries will certainly not stand by and the US leadership in the global financial markets could end up being put at serious risk.
