U.S. Senators Kirsten Gillibrand and Cynthia Lummis introduced a bill to regulate stablecoins.
Based on the announcement in a press statement, the legislation was collaboratively created by the Federal Reserve and New York State Department of Financial Services. The companies issuing stablecoins are required to hold an equal amount of cash or its equivalent as collateral for each token they release.
Furthermore, the proposed legislation includes a prohibition against algorithmic stablecoins without collateral. The bill’s creators contend that it will be impossible for either the issuers or the users to employ these stablecoins for illicit or unauthorized activities, including money laundering.
In order to address the increasing requirement of our dynamic financial sector, it is essential that we draft laws providing a well-defined and functional structure for stablecoins, all the while safeguarding consumers.
Senator Cynthia Lummis (R-Wyo.)
According to the accompanying text, the objective of the bill is to establish a supportive environment that fosters “careful” advancements. The legislation intends to employ stablecoins for quicker cross-border payments, reduced transaction costs, and unleashing the digital asset sector’s hidden potential.
In early April 2024, news surfaced about the drafting of an opposing bill regarding stablecoins. This development came as a reaction to the spring 2023 bill that suggested regulatory oversight of stablecoin issuers under the Federal Reserve and a short-term prohibition on algorithmic stablecoins.
Gillibrand referred to her legislation as a fair concession, giving authority over regulation to state officials. Following the announcement, Senate Banking Committee Chairman Brown expressed his readiness to support the bill’s approval under specific terms.
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2024-04-17 20:59