Proposed Draft Bill Would Classify Stablecoins as Securities in U.S.

U.S. Congresswoman Sylvia Garcia (D-Texas) has proposed a new draft bill called the “Stablecoins are Securities Act of 2019.” A discussion draft of the bill was published on the House of Representatives’ Financial Services Committee website on Tuesday, and includes language that would expand the scope of the 1933 Securities Act to cover stablecoins:

It is the sense of Congress that (1) digital assets, known as managed stablecoins, are investment contracts and therefore are securities within the meaning given the term in section 2(a) of the Securities Act of 1933;  and (2) because issuers of managed stablecoins nevertheless maintain that managed stablecoins are not securities, it is appropriate for Congress to provide clarity by amending statutory definitions of the term security to include managed stablecoins,”

The bill’s language would apply to any stablecoin that has its market value determined in any significant way by “reference to the value of a pool or basket of assets, including digital assets, held, designated, or managed by one or more persons.” Some observers have noted that the bill could be seen as a direct response to Facebook’s proposed Libra coin, which is expected to be managed by the Libra Association if and when it launches.