US Senators Cynthia Lummis and Kirsten Gillibrand have taken a significant step in the regulation of stablecoins by introducing a new legislative proposal. This bill aims to establish clear operational guidelines for stablecoin issuers in the United States.
The proposed legislation defines a payment stablecoin as any dollar-pegged digital asset used for payments or settlements. It mandates stablecoin issuers to adhere to operational and reserve requirements to ensure the stability and reliability of these digital assets. This includes forming subsidiaries for issuing stablecoins and backing tokens with dollar-reserved assets.
To ensure oversight, stablecoin issuers would also need to register as non-depository trust companies with the Federal Reserve Board of Governors or become authorized national payment stablecoin issuers.
One significant aspect of the bill is its prohibition of algorithmic stablecoins, which rely on algorithms rather than full collateral to stabilize their value. The legislation also introduces a cap of $10 billion on assets handled by non-depository trust institutions before requiring them to convert into depository institutions. This measure aims to distinguish between smaller and larger firms that could pose systemic risks.
Both senators emphasized the importance of this legislation in maintaining the US dollar’s dominance and ensuring consumer protection. Gillibrand highlighted that the regulatory framework is “absolutely critical” and can earn the necessary support in the Senate and the House.
This bill is part of the Senators’ efforts to integrate digital asset regulations into the US financial system, ensuring the stability of stablecoins and protecting consumers. With this new proposal, they continue their collaborative efforts to shape the regulatory framework of stablecoins in the United States.
