NASAA (North American Securities Administrators Association) has sent a letter to Congress requesting the definition of a “payment stablecoin” does not incorporate the payment of interest, similar to a money market fund.
NASAA addressed the House Financial Services Committee and the Senate Banking Committee, where the stablecoin legislation will be hashed out. Signed by current NASAA President Leslie M. Van Buskirk, she asks, “federal legislators exclude all interest-bearing securities from the definition of payment stablecoin” as interest-bearing assets should be designated a security.
Stablecoins are digital assets tied to another asset that holds value. Typically, this means fiat currency, but it could also mean a commodity. There have also been efforts to create algorithmic stablecoins but without much success.
While stablecoins are crypto-adjacent, a better way to view these digital assets is as the future of payments: secure, quick, and less costly. As stablecoin issuers tied to currency are expected to hold assets in reserve (think T-bills for the dollar), there is a potential to generate interest. Today, stablecoin issuers earn the interest, but they could pass all or some of this income to stablecoin holders.
NASAA highlights that “there is a growing menu of tokenized securities and funds,” including CDs, T-Bills, bonds, and more. NASAA states that certain stablecoin legislation may be interpreted to include “securities,” which should be removed.
It is widely believed that both the House and the Senate will approve stablecoin legislation and then signed into law in the coming months. Currently, stablecoin issuers dance around the various state and federal regulations to issue a stablecoin. These issuers have long desired clarity, and Congress is finally getting its act together.
NASAA’s letter is available here.