Lummis-Gillibrand bill will ban algorithmic stablecoins: Law Decoded

Senators Kirsten Gillibrand and Cynthia Lummis of the United States have proposed a new law to create guidelines for managing digital currencies called payment stablecoins.

The law intends to prevent the use of “unsecured, algorithmically managed stablecoins,” a possible reference to TerraUSD (UST) losing its peg to the US dollar in 2022. Issuers must keep a reserve equal in value to each token issued accordingly.

In simpler terms, this means establishing regulatory frameworks for stablecoin issuers at both the federal and state levels, ensuring the stability of our current two-tiered banking system.

Based on the text of the bill, which is 179 pages long, trust companies that are not depository institutions in the state can issue up to $10 billion worth of payment stablecoins. Authorized institutions, on the other hand, have the ability to issue an unlimited amount of stablecoins under a charter with limited purposes.

The law additionally intended to maintain the existing arrangement of state and federal charters and introduced regulations regarding custody for trust companies that do not hold deposits.

Coin Center, an advocacy organization, has voiced objections to the legislation, arguing that it would represent poor governance and potentially violate constitutional laws due to its intended ban on algorithmic stablecoins.

The team contended that regulating algorithmic stablecoins by banning them infringes upon computer code, potentially violating the freedoms granted under the First Amendment.

Coin Center proposed that the Clarity for Payment Stablecoins Act, which is up for a final vote in the U.S. House of Representatives, takes a “reasonably balanced” stance on algorithmic stablecoins by implementing a two-year halt instead of an absolute prohibition.

Canada transits to international crypto tax reporting standard

Canada intends to adopt the International Crypto-Asset Reporting Framework (CARF) for tax purposes by the year 2026. The country is taking an advanced approach to this upcoming standard, which is projected to be followed by 47 nations by the year 2027.

Crypto asset service providers (CASPs) like cryptocurrency exchanges, brokerages, dealers, and ATM operators, regardless of whether they’re individuals or businesses, will face new reporting obligations imposed by the CARF.

CASPs (Crypto Asset Service Providers) must provide the Canada Revenue Agency with details of transactions involving both fiat currency and crypto assets exchanging for other crypto assets. Additionally, significant crypto asset transfers or payment processing by CASPs valued over $50,000 should be reported.

Arkansas wants to restrict crypto mining

A Senate committee in Arkansas has approved two proposals limiting cryptocurrency mining in the state. These bills serve as a foundation for more debates on the topic.

During a Senate hearing on the 17th of April, legislators aimed to tackle various issues including reducing noise levels, addressing foreign control, and considering the distance between cryptocurrency mining operations and residential neighborhoods.

The committee will carry on debating the issue and take in further public opinions. The question of regulating crypto mines and by how much at the state level emerged due to the Arkansas Data Centers Act, which restricted local authorities from regulating crypto mines.

Binance returns to India, gets Dubai license

After being banned for four months, Binance cryptocurrency exchange is preparing to resume operations in India by paying a penalty of $2 million for not adhering to the regulations.

After being blocked by India’s financial regulators, Kraken will become the second cryptocurrency exchange to resume operations in the country following KuCoin.

Approximately 90% or more of cryptocurrency trading in India was allegedly handled by Binance prior to its ban in January.

After relinquishing his voting rights in the local entity of the company, co-founder Changpeng Zhao allowed the business to obtain its Dubai Virtual Asset Service Provider (VASP) license.

According to sources close to the situation, the Virtual Assets Regulatory Authority demanded that Zhao relinquish his voting rights in Binance FZE, the Dubai branch of the cryptocurrency exchange, as a prerequisite for obtaining the VASP license from them.

According to Binance’s present CEO, Richard Teng, there have been rumors that Changpeng Zhao has relinquished his voting rights. However, Teng clarified that these reports are merely conjecture and not confirmed facts.

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2024-04-22 22:14