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<h2 id="header-0">Next week, the US House Financial Services Committee will vote on a bill to regulate stablecoins.</h2>As per details,  the draft bill proposes a two-year ban on algorithmic stablecoins such as TerraUSD.In May 2022, the <a href="https://www.coingabbar.com/en/crypto-currency/terrausd-wormhole-ust-prices-usd" rel="noopener noreferrer nofollow">TerraUSD</a> stablecoin experienced a severe meltdown, wiping out more than $40 billion in investor wealth. Since then, regulators have kept a close eye on collateralized stablecoins.As per the latest version of the draft bill released by an American local media outlet, it would be illegal to create and issue new &#34;endogenously collateralized stablecoins.&#34; A new definition for stablecoins, which are &#34;marketed as being able to be converted, redeemed, or repurchased for a fixed amount of monetary value,&#34; will be implemented soon. This includes stablecoins that rely only on other digital assets to sustain their value.For example, TerraUSD was using an algorithm to maintain a 1:1 peg to the US dollar while trading in <a href="https://www.coingabbar.com/en/crypto-currency/terra-luna-2-luna-prices-usd" rel="noopener noreferrer nofollow">sister token LUNA</a>. As we observed, the de-pegging of TerraUSD resulted in a significant sell-off of LUNA tokens. Both of these <a href="https://www.coingabbar.com/en/crypto-blogs-english/why-terra-luna-and-ust-crash" rel="noopener noreferrer nofollow">Terra ecosystem</a> cryptos eventually failed, resulting in a $40 billion loss.Stablecoin RegulationsAs per reports, HFSC Chairwoman Maxine Waters and Ranking Member Patrick McHenry have been working together to pass stablecoin legislation.The draft legislation might also mandate the US Treasury and Federal Reserve to conduct a study on Terra-like stablecoins. It will also include the SEC, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation.Along with addressing concerns with Terra-like stablecoins, the proposed bill would also allow banks and nonbanks to issue stablecoins. However, bankers would also need to seek approval from authorities such as the OCC. The Fed would develop a decision-making mechanism for nonbanker issuers.As an American media outlet reports: “Nonbank <a href="https://www.coingabbar.com/en/crypto-dictionary/stablecoin" rel="noopener noreferrer nofollow">stablecoin</a> issuers that are approved at the state level and register with the Fed within 180 days of that approval will be able to operate under the bill.”Read also: <a href="https://www.coingabbar.com/en/crypto-currency-news-english/crypto-market-turns-red-ahead-major-fed-decision" rel="noopener noreferrer nofollow">Crypto Market Turns Red Ahead Of Major Fed Decision</a>

Two Year Ban on Algorithmic Stablecoins | US Govt

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