Senate representatives Kirsten Gillibrand and Cynthia Lummis have proposed a law creating guidelines for the oversight of payment stablecoins in the United States.
On the 17th of April, Senators Lummis and Gillibrand unveiled the Payment Stablecoin Act, a bill they had been working on for several months with plans to reveal it in 2024. As stated by the senators, this legislation aims to ban “unsecured, algorithmic stablecoins,” possibly referring to TerraUSD (UST) losing its peg to the U.S. dollar in 2022. It also mandates one-to-one reserves for issuers, establishes regulatory frameworks for firms at both the state and federal levels, and restricts unlawful uses of stablecoins.
Senator Gillibrand emphasized the importance of establishing regulations for stablecoins to preserve the US dollar’s leading position, encourage responsible innovation, shield consumers, and combat money laundering and illicit financing. To craft a robust bill, we collaborated closely with relevant federal and state agencies. I am optimistic that this legislation will secure the required approval in both the Senate and the House.
The 179-page bill text permits state non-depository trust companies to issue a maximum of $10 billion in payment stablecoins. Authorized institutions, meanwhile, can issue an unlimited amount under a restricted state charter. This legislation intends to maintain the existing system of state and federal charters while setting guidelines for stablecoin custody within non-depository trust companies.
The document emphasizes the importance of following correct custodial procedures for issuers, given recent events like FTX.
In October 2023, Senator Lummis requested that the Justice Department investigate Tether, a stablecoin issuer, for suspected involvement in facilitating funds used by Hamas after their terrorist attack on Israel. Previously, she collaborated with Senator Gillibrand to propose legislations concerning cryptocurrencies. One such bill aimed at creating a clear regulatory structure defining the responsibilities of both the Securities and Exchange Commission and Commodity Futures Trading Commission in overseeing digital assets.
Lummis and Gillibrand have been playfully debating the proposed regulations for stablecoin creators in the US, sparking worry from numerous legislators and business figures. In July 2023, the House of Representatives advanced one such proposal, named the Clarity for Payment Stablecoins Act, through committee. Despite appearing prepared for a vote on the chamber floor, this bill has stalled without significant progress over several months.
According to reports, Senator Sherrod Brown, who heads the Senate Banking Committee, stated on April 16th that passing a bill regarding stablecoins would be among his legislative priorities, as long as his apprehensions were addressed. At that point, he didn’t explicitly refer to the initiatives of Senators Lummis and Gillibrand.
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2024-04-17 19:32