Terra disaster fuels work of Congress on stablecoin legislation

-Stablecoins have been a priority for US lawmakers since November.
-Following TerraUSDs collapse this week, Congress is suddenly facing the issue of algorithmic stablecoins.
-Maxine Waters (D-CA), chair of the House Financial Services Committee, is said to be curating a package of crypto legislation that may come out by the end of this Congress.
-Stephen Lynch (D-MA) told The Block that his ECash bill will be part of that package.
-Grey, one of the bill’s authors, objects to the PWG’s separation of algorithmic and non-algorithmic stablecoins.
-The particulars, Lynch said, were still up for discussion.
-Introduced at the end of the last congress, the STABLE Act did not feature such a carve-out, nor did it have a chance to become law.
-There have been increasing suggestions that Republicans are looking at algorithmic stablecoins more as money market funds, which face regulation by the SEC and are accessible only via registered broker-dealers.
-Among Republicans a party line seems to be developing that the collapse of Terra and Tethers subsequent slip should primarily fuel legislation on fiat-backed stablecoins.
-Algorithmics may have to wait.
-Senator Pat Toomey (R-PN), the leading Republican on the Senate Banking Committee, is driving the most prominent active piece of legislation addressing stablecoins.
-That draft bill, the Stablecoin TRUST Act, explicitly addresses payment stablecoins, establishing a category that deliberately avoids the algorithmic variety.
-Toomey said that “there is no systemic risk, certainly not right now and I don’t think in the future, because the nature of the algorithmic stablecoins is that they are not backed by an asset that would be subject to a systemic risk.”
-In the Senate, Democrats do not seem optimistic about getting their vision for crypto legislation passed into law.
-Brown, instead, put his faith in Gary Gensler, chair of the Securities and Exchange Commission, to take action.