US Senators Kirsten Gillibrand and Cynthia Lummis have introduced a new bill aimed at regulating stablecoins in the United States.
The bill, developed in collaboration with the Federal Reserve and the New York State Department of Financial Services, mandates that stablecoin issuers maintain reserves of cash or cash equivalents at a 1:1 ratio to support their tokens.
Furthermore, the legislation prohibits unbacked algorithmic stablecoins, with the authors asserting that neither issuers nor users should employ stablecoins for illegal or unauthorized activities, such as money laundering.
The bill’s explanatory note underscores its goal of establishing a framework that fosters “responsible” innovation. It envisions leveraging stablecoins for expedited cross-border transactions, reduced fees, and unlocking the potential of the digital asset industry.
News of an alternative stablecoin bill emerged in early April 2024 as a response to a bill introduced in the spring of 2023, which proposed placing stablecoin issuers under the supervision of the Federal Reserve and implementing a temporary ban on algorithmic stablecoins.
Gillibrand describes her bill as a reasonable compromise, placing regulatory oversight in the hands of state regulators. Following its publication, Sherrod Brown, the head of the U.S. Senate Banking Committee, expressed readiness to support the bill’s passage under certain conditions.
