According to Bloomberg, regulatory legislation for stablecoins is being drafted in the House of Representatives and intended to place a 2-year ban on coins similar to the infamous TerraUSD (LUNA), the algorithmic stablecoin that collapsed earlier in May this year. In early May of this year, LUNA plummeted 45% over a single day, and in order to secure the peg, it was necessary to increase its volume in circulation, which caused an even greater depreciation of the cryptocurrency. As a result, the UST token dropped to less than a cent. The $60 billion capitalization evaporated, leading to the bankruptcy of CeFi services. The cryptocurrency market before the incident with Terra was estimated at $2 trillion, but already in June it fell below $1 trillion. Furthermore, as many of us still recall, corresponding investors had gone bankrupt, Terra CEO Do Kwon is still on the run, and an arrest warrant has been issued for him by the South Korean prosecutor's office. Do Kwon himself on his Twitter page denies reports that he has been on the run, and is ready to cooperate with the authorities.

Under the latest version of the bill, it would be illegal to issue or create new “endogenously collateralized stablecoins,” according to a copy obtained by Bloomberg. The definition would kick in for stablecoins marketed as being able to be converted, redeemed or repurchased for a fixed amount of monetary value, and that rely solely on the value of another digital asset from the same creator to maintain their fixed price.

In the draft version of the bill, it is indicated that 4 U.S. regulators will supervise this sector simultaneously. These are OOC, FDIC, FED and SEC. The moratorium applies to algorithmic stablecoins, whose peg to the U.S. dollar is guaranteed by a collateral mechanism from various digital currencies or an ecosystem service token.

The legislation draft notes that issuance of stablecoins backed by real dollars and/or currency nominated securities are the sole privilege of duly authorized banks and other legal financial operators. All respective collaterals must be put on designated escrow accounts. Licenses for the issuance of stablecoins will be issued by the Foreign Exchange Commission (CFO) for the banking sector and the Federal Reserve System (FED) for other market participants.