US Senators Introduce New Payment Stablecoin Bill
Senator Kristen Gillibrand and Senator Cynthia Lummis as per a new Cointelegraph article noted that they are working on a new legislative document on stablecoin regulations. The whips noted that the bill in question is directed towards streamlining regulations for stablecoin issuing and utility. Both US senators have talked about introducing a regulatory framework for stablecoin-based payments as well.
On 17th April the senators announced the introduction of Lummis-Gillibrand Stablecoin Payment Act. The senators noted that they have been working on drafting the bill for months and expected to release it on a public scale in 2024.
Gillibrand and Lummis introduced a prohibition against the unbacked and algorithmic stablecoins. The law is inspired from the disastrous collapse of TerraUSD that depegged from USD in 2022.
The bill in question also mandates stablecoin issuers to ensure 1:1 backing reserves by issuers and establish state and federal-level regulatory frameworks for financial institutions and prevent illegal usage of stablecoins.
Senator Gillibrand noted making a regulatory framework for stablecoin is critical for maintaining USD dominance, promote innovation, secure consumers, and push back against financial crimes such as money laundering.
Importance and Implications of the New Stablecoin Bill
US Senator Gillibrand further noted that the team of senators has worked diligently on creating the strongest possible bill. She highlighted that the offices worked in unison and the association with federal and state-based agencies. The senator also expressed confidence in the legislator to be able to earn the required support in the Senate and the House.
The 179-paged bill enables non-depository trust companies to issue around $10 billion in payment stablecoins with authorized institutional support for issuing stablecoins. These firms will be able to issue any amount of stablecoin in accordance with the limited-purpose state charter.
The legislative document expressed an aim to uphold the existing system of state and federal-based charters and policy frameworks regarding custodial and non-depository trust firms.
Proper custodial services for issuers are necessary in the context of cases such as FTX. One of the documents of the stablecoin bills made note of the idea. Last year in October, Senator Lummis approached the Department of Justice to take action against stablecoin issuing firm Tether for allegedly facilitating Hamas after the mercenary for hire group launched an attack on Israel.
US Senators Highlight the Importance of Regulating Stablecoins
Speaking on the matter of sensitive topics such as terror financing, Senator Gillibrand talked about the importance of stablecoin-focal legislator. The senator quoted one important digital asset bill to establish a comprehensive regulatory guideline for cryptocurrencies.
This bill also outlined the role and jurisprudence of regulatory agencies such as the Securities and Exchange Commission and Commodity and Futures Trading Commission in the crypto sector.
Lummis and Gillibrand noticed that they have been teasing crypto legislation during ongoing concerns from lawmakers and industry leaders to implement guardrails for stablecoins.
The House Representatives worked on one such bill that called for clarity regarding stablecoin regulations in the nation and titled Clarity for Payment Stablecoin Act which was published in July 2023. Although, this legislator is now ready for a floor vote and has underwent little movement in months.
Chairperson of the Senate Banking Committee, Senator Sherrod Brown stated on 16th April that the stablecoin bill is one of his major goals in the legislative session. He further declared that his concerns have been addressed now. He however refrained from making note of Lummis or Gillibrand’s stablecoin regulatory efforts to date.
Binance Vs SEC Lawsuit
Another major regulatory development as reported by Cointelegraph indicated that an unrelated criminal case can boost the Binance versus SEC lawsuit. On this account, Binance CEO CZ asked the court to establish a clear position of US government on the matter of stablecoins as security.
The former executive filed a new appeal on 25th April as Notice of Supplement Authority and brought the court’s attention to a criminal case namely Mango Markets versus Avraham Eisenberg that proved no factual basis for trading USD coin as security.
