On February 15, Representative Warren Davidson (R-OH) announced he will be introducing the “Keep Your Coins Act,” which is intended “[t]o prohibit Federal agencies from restricting the use of convertible virtual currency by a person to purchase goods or services for the person’s own use, and for other purposes.” That same day, Congressman Josh Gottheimer (D-NJ) also announced a discussion draft of the “Stablecoin Innovation and Protection Act, which is intended to define “qualified stablecoins” to differentiate them from “more volatile cryptocurrencies.”
Davidson, a member of the House Financial Services Committee and the Congressional Blockchain Caucus, has been active in this space, having previously introduced the Token Taxonomy Act of 2021 (H.R. 1628) and co-sponsored the Blockchain Solutions for Small Business Act (H.R. 6597). The present bill would prevent any head of a federal regulatory agency from “prohibit[ing] or otherwise restrict[ing] the ability of a covered user to use virtual currency or its equivalent for such user’s own purposes, such as to purchase real or virtual goods and services for the user’s own use; or conduct transactions through a[n] self-hosted wallet.” The legislation defines “convertible virtual currencies” as “[a] medium of exchange that has an equivalent value as currency” as defined in 31 C.F.R. § 1010.100, “or acts as a substitute for currency but may not possess all the attributes (including legal tender status) as specified under” 31 C.F.R. § 1010.100. A “covered user” is defined as someone “that obtains convertible virtual currency to purchase goods or services on that person’s behalf,” regardless of how that person obtained the virtual currency. And a “self-hosted wallet” is defined to “mean an interface used to secure and transfer virtual currency, and under which the owner of convertible virtual currency retains independent control over such convertible virtual currency that is secured by such digital interface.” Representative Davidson said the bill “takes the [Financial Crimes Enforcement Network] language that’s been out there for a while now and provides a framework for [Know Your Customer] that protects self-custody.”
Meanwhile, Gottheimer’s legislation would define certain digital currencies as “qualified stablecoins” if they are “cryptocurrency redeemable on demand on a one-for-one basis for U.S. dollars and issued by one of two qualified issuers, either an insured depository institution such as a bank or a non-bank qualified stablecoin issuer.” Qualified “stablecoins,” which is defined as not a security or derivative, could be issued either by a federally backed bank or a nonbank that agrees to maintain at least 100% reserve assets consisting of U.S. dollars, U.S. debt or other assets the Office of the Comptroller of the Currency (OCC) deems appropriate cash collateral, with the cash collateral being held in a segregated Federal Deposit Insurance Corporation (FDIC) insured account. The legislation provides the OCC with primary oversight authority over both types of stablecoin issuers. To help further protect consumers, the FDIC will be required to develop a Qualified Stablecoin Insurance Fund to manage the insurance of redemption payments of nonbank issuers. Neither the Securities and Exchange Commission nor the Commodities Futures Trading Commission would be restricted from examining nonqualified stablecoins and other cryptocurrencies as potentially being securities and derivatives.