Senators Propose New Bill Banning Algorithmic Stablecoins

Two senators — one Republican, one Democrat — are proposing a measure to regulate stablecoins amid a push in the House and Senate to pass such legislation as soon as next month.

HT Image

Cynthia Lummis, a Wyoming Republican, and Kirsten Gillibrand of New York said Wednesday that their bill would protect consumers and the US dollar while enabling innovation in payments. 

HT launches Crick-it, a one stop destination to catch Cricket, anytime, anywhere. Explore now!

It’s not immediately clear if the measure will satisfy Banking Chairman Sherrod Brown, who in an interview Tuesday, floated tying a stablecoin bill to a broader package that would authorize banks to do business with marijuana companies and claw back compensation for executives of failed lenders. 

“It protects consumers by mandating one-to-one reserves, prohibiting algorithmic stablecoins, and requiring stablecoin issuers to comply with US anti-money laundering and sanctions rules,” Gillibrand said in a statement. The bill was drafted with technical assistance from the Federal Reserve, the Treasury Department, the Federal Deposit Insurance Corporation and New York and Wyoming regulators, the senators said in the statement.

“Passing this bipartisan solution is critical to maintaining the US dollar’s dominance and making certain the US remains the world leader in financial innovation,” added Lummis, a longtime crypto advocate.

In addition to setting rules for stablecoin issuers, the bill creates a mechanism for FDIC conservatorship and resolution if an issuer becomes insolvent. 

Backers argue that stablecoins can enable near-instant payments globally with potentially lower fees than traditional payment networks, and say regulation is needed to support the use of the dollar for digital transactions. State trust companies would be authorized to create and issue payment stablecoins up to $10 billion, with federal or state depository institutions authorized to issue any amount.

Earlier: Push for Stablecoin Law Gets Surprise Boost from Sherrod Brown

Brown, a crypto skeptic, has long supported robust regulation of cryptocurrencies to protect consumers, while fellow Banking Committee Democrat Elizabeth Warren has warned of risks to the financial system if stablecoin legislation doesn’t provide adequate protections.

House Financial Services Chairman Patrick McHenry and the panel’s top Democrat Maxine Waters also met with Senate Majority Leader Chuck Schumer last week about finding a path for a stablecoin bill, with one possibility adding it to legislation to reauthorize the FAA next month.

This article was generated from an automated news agency feed without modifications to text.

Leave a Comment