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RE: LeoThread 2025-05-20 13:09

in LeoFinance5 months ago

Consumer Protections and Insolvency:
Priority in Insolvency: In the event of an issuer’s insolvency, stablecoin holders have priority over other claims, with reserves considered “bankruptcy remote” to protect customer funds. This applies to both federal and state insolvency proceedings, superseding conflicting state laws.

Study on Insolvency Risks: The latest draft mandates a study within three years to examine the implications of stablecoin insolvency, including whether customers can be repaid and if bankruptcy laws need adjustments. This addresses concerns about systemic risks but does not provide immediate FDIC-like guarantees.

Consumer Protection Standards: States can impose consumer protection requirements on out-of-state issuers only to the extent they align with federal law, preventing excessive state-level restrictions while maintaining federal preemption.