In advance of Mark Zuckerberg’s highly anticipated testimony before the House Financial Services Committee regarding Facebook’s stablecoin cryptocurrency called Libra, Texas Congresswoman Sylvia Garcia introduced a draft bill entitled the “Stablecoins are Securities Act of 2019.” The bill would amend the definition of the term “security” in the Securities Act of 1933 to include managed stablecoins.
Stablecoins are digital tokens backed by actual currency such as the US dollar or gold in order to maintain a stable rate. Over the past year, many lawmakers in the United States and Europe have expressed concern that stablecoins, including Libra, are not adequately regulated by governmental bodies. For example, former Commodity Futures Trading Commission Chairman Gary Gensler testified before the Financial Services Committee in July that Libra looks similar to an exchange-traded fund, which does fall within the SEC’s purview. Thus, if signed into law, the bill would address this issue by giving the SEC jurisdiction over all stablecoins and their issuers.
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About Megan Sullivan
Megan Sullivan is a Partner in the New York office of Faruqi & Faruqi, LLP.