NAIROBI (Coinchapter.com) – US Senators Kirsten Gillibrand and Cynthia Lummis have introduced groundbreaking legislation to establish a regulatory framework for payment stablecoins. The Lummis-Gillibrand Payment Stablecoin Act, unveiled on April 17, 2024, aims to provide much-needed guardrails for this rapidly evolving sector of the cryptocurrency market.
The bill bans ‘unbacked, algorithmic stablecoins,’ directly addressing the 2022 TerraUSD (UST) incident, and mandates one-to-one reserves for issuers. It also establishes state and federal regulatory frameworks for stablecoin-related firms and introduces measures to combat illegal activities.
Protecting Consumers and Promoting Innovation
Regulating stablecoins is key to keeping the U.S. dollar dominant,” stated Senator Gillibrand. “It promotes innovation and protects consumers.” She also highlighted efforts against money laundering and illicit finance. Gillibrand noted her office worked with federal and state agencies on drafting this strong bill. She expressed confidence in gaining necessary support in the Senate and House.
Senator Lummis echoed Gillibrand’s sentiments, highlighting the importance of establishing clear guardrails for the stablecoin market. In October 2023, Lummis had called for the Justice Department to take action against stablecoin issuer Tether, alleging that the firm had facilitated funds used by the terrorist group Hamas following an attack on Israel.
Regulatory Scrutiny for Stablecoins
The Lummis-Gillibrand Payment Stablecoin Act is the latest development in the ongoing efforts to regulate the stablecoin industry in the United States. In July 2023, the House of Representatives took the Clarity for Payment Stablecoins Act out of committee, although the legislation has seen little movement since then.
“To draft the strongest bill possible, our offices worked closely with the relevant federal and state agencies and I’m confident this legislation can earn the necessary support in the Senate and the House,”
Added Senator Gillibrand.
Senate Banking Committee Chair Sherrod Brown stated on April 16 that a stablecoin bill would be one of his goals for the legislative session, provided his concerns were addressed. However, he did not specifically mention the Lummis-Gillibrand bill at the time.
The Lummis-Gillibrand Payment Stablecoin Act is under legislative scrutiny. Its approach may set a precedent for cryptocurrency laws. The crypto industry and regulators are watching closely. They recognize the balance needed between innovation and consumer protection in the digital economy.
