Two TX Reps Propose “Managed Stablecoins are Securities Act of 2019”
Texas Representatives Sylvia Garcia and Lance Gooden have proposed a new bill that could change the way certain cryptocurrencies are regulated, called the “Managed Stablecoins are Securities Act of 2019”.
The Bill defines “managed stablecoin” as a digital asset that:
“(a) is not a security registered under section 8(a) of the Investment Company Act of 1940; and
(b) satisfies one or more of the following:
(i) the market value of such digital asset is determined, in whole or in significant part, directly or indirectly, by reference to the value of a pool or basket of assets, including digital assets, held, designated, or managed by one or more persons.
(ii) one or more holders of such digital asset, directly or indirectly, are entitled to obtain consideration or other assets, including other digital assets and any sovereign currency of a foreign government or the United States, in exchange for the digital asset, the amount of which payment is determined, in whole or in significant part, directly or indirectly, on the basis of the value of a pool or basket of assets, including digital assets, held, designated, or managed by one or more persons.”
The bill further proposes that managed stablecoins “are investment contracts and therefore are securities with the meaning given the term in section 2(a) of the Securities Act of 1933; and 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.”
According to CNBC, the proposed bill would make Facebook’s controversial Libra cryptocurrency a security. One of the co-authors of the bill, Sylvia Garcia, had previously said that Mark Zuckerberg’s answers at his October congressional hearing regarding the cryptocurrency were “disappointing”. Facebook has always pushed back against Libra being labeled a security, because avoiding that label would mean that they would not be subject to the same regulations as securities.
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