Banks May Enter Stablecoins If U.S. Senate Passes Bill: S&P

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The US Senate is proposing a law to encourage banks to enter the world of stablecoins, according to S&P Global’s assessment.

A proposed bill called the Payment Stablecoin Act, introduced on April 17th, may lead to American bankers creating stablecoins pegged to the US dollar. This development could pose a challenge for non-American corporations, like Tether, that are well-known for issuing stablecoins.

Based on S&P’s assessment, stablecoins hold a pivotal role in today’s financial markets. The BUIDL fund, overseen by BlackRock, serves as a noteworthy demonstration of stablecoins’ effectiveness in the process of tokenizing assets.

A new law is being suggested which imposes the following conditions on non-bank firms issuing stablecoins: their total issuance should not exceed $10 billion; algorithmic stablecoins without collateral are prohibited; and the issuers must maintain reserves equivalent to the value of their coins.

Should the bill pass, banks may gain an advantage over non-bank firms due to limitations on their issuance of notes. However, this could pose a problem for Tether, a $110 billion market cap stablecoin, as it has yet to receive US approval.

Sen. Kirsten Gillibrand underscores the importance of controlling stable coins to protect the dollar’s leading position in finance and aid in combating illicit transactions.

Despite this, the advocacy organization Coin Center expresses opposition to the bill. They argue that the proposed ban on algorithmic stablecoins infringes upon free speech rights.

The role of the bill in overseeing stablecoin markets includes keeping an eye on how it might affect Tether. We need to stay vigilant as regulatory advancements unfold.

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2024-04-25 08:04