Proposed Stablecoin Regulation and Existential Threats to DAI

I’m sure many are aware of this, but for those who aren’t following US policy developments closely, Rep Don Beyer has proposed a bill which would regulate crypto, which has a heavy focus on stablecoin regulation:

Ive already broached part of this topic on another post (Mapping out policy challenges and opportunities for Maker - #39 by Quiet) however I thought the proposed stablecoin regulation merited it’s own post.

TLDR, Beyer’s legislation suggests the outright illegalization of fiat pegged or collateralized stable issuance, and stablecoin use except for stablecoins which meet regulatory criterion, and which are registered by their issuer (something a DAO likely cannot do in current frameworks). As I understand, this could chastise not just parties considered as issuers of DAI, but CEXs and Firms, which list DAI, or use it in their own processes.

Right now the regulatory attention on stablecoins has been primarily given to centralized issuers like USDT. Even if the worst case of DAI being delisted or blacklisted doesn’t occur, these regulations will also make things riskier for these centralized stable collateral types that DAI is dependent on.

This seems like a potential existential threat to the protocol. Even if the language written here is revised or this bill goes nowhere, this may be the start of a monumental change of footing of policymakers on the issue, from cautious application of pre existing laws and vague statements, to active regulation and codification of restrictions on stables. What are other community members thinking in regards to this?


So I won’t comment on the specific legislation proposed here.

But several senators’ offices have stated they oppose this particular language and will support instead the somewhat lighter touch of proposed amendments.

Additionally, some influential House members have made it clear what their primary concerns are in this area. The good news is that Maker can very easily assuage their fears and concerns. The bad news is that Tether and USDC won’t be able to, and it is a bit of a battle to demonstrate how Maker is operationally different from our competitors. Indeed, in the stablecoin horse race, we are the only pony that can’t interfere with Fed policy, is transparent, and is not fragile in the face of runs.

What will be the outcome? Who knows? But that’s what our understanding of the current climate is. If you’re American, write/call your representative and senators.

Unfortunately, a DAO is in no position to lobby, as that carriers certain legal reporting requirements and also a level of discretion and feather touch that a brutally public and transparent organization won’t be good at. So we are likely to be just observers


Thanks for the fast and informative reply. Definitely assuages some of my concern about this particular legislation.

In regards to your comment about legislators having made their main concerns known, what are those concerns and how exactly does Maker satisfy them? I know the whole problem with transparency of held reserves/collateral is obviously not one maker shares with USDT and USDC

I was also under the impression that a significant onus for regulation was coming from the angle of the larger AML/KYC concerns with defi and feelings that stables were undermining prior CEX and Onramp focused enforcement. How do you see those concerns possibly factoring in?

Apologies for asking you alot of different questions here, but you seem to be up to date on these conversations

1 Like