Senators Gillibrand and Lummis will present new legislation on the regulation of stablecoins, with the aim of promoting financial innovation. The bill addresses regulatory conflicts, classifies stablecoins, and establishes strict issuance conditions to combat bad practices. Gillibrand highlights the balance of the legislation and its potential to integrate cryptocurrencies into the overall financial system.
Senators Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.) are about to introduce groundbreaking stablecoin legislation.
The bill’s success could herald a new era of innovation and financial stability, in line with the dynamic needs of the digital economy.
USA: How It Plans to Eradicate Bad Practices in Stablecoins
The senators’ announcement at the Bitcoin Policy Summit in Washington marks a pivotal moment in cryptocurrency regulation. According to Forbes, senators plan to introduce the bill later this week or next.
Amid the regulatory turmoil affecting companies like Coinbase and Binance, this legislative effort is timely. It also addresses the ongoing disputes between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These agencies have been at odds over the classification and control of cryptocurrencies.
Gillibrand and Lummis, drawing on their experience, previously advocated for the Responsible Financial Innovation Act. This law sought to establish a comprehensive regulatory framework for crypto assets. Furthermore, it proposed classifying most cryptocurrencies as commodities and therefore under the jurisdiction of the CFTC.
However, the new stablecoin bill aims to improve the integrity of the sector and allows non-depository institutions to issue stablecoins under strict regulatory conditions. This guarantees the security of the sector and encourages innovation. Gillibrand explained the following:
“We are ensuring that state and federal regulators have the oversight authority necessary to root out bad actors while continuing to promote growth and innovation. And we are demanding that all issuers ensure that reserves return to one-to-one.”
The bill outlines two issuance routes for stablecoins. Depository institutions could issue them, following federal and state regulations on banking statutes. Alternatively, non-depository institutions would be under federal supervision, with states playing a significant regulatory role.
USA: New Regulation on Stablecoins?
Gillibrand emphasizes the balanced nature of the bill, which is built through compromise. It seeks to align the interests of state entities and the cryptocurrency sector.
The stablecoin legislation represents a broader vision of integrating the cryptocurrency market into the financial mainstream. Stablecoins, according to Gillibrand, could be the cornerstone of regulation. They could unleash the full potential of cryptocurrencies, leading to a more inclusive financial system.
Furthermore, ongoing negotiations highlight the importance of bipartisan and bicameral support. Key political figures, such as Patrick McHenry (R-NC) and Maxine Waters (D-CA), are active in these debates. Previously, these lawmakers have maintained a pro-cryptocurrency stance.
Key Congressman McHenry Maintains US Stablecoin Act Will Pass This Year
Patrick McHenry (R-NC) remains adamant that Congress can produce stablecoin regulation legislation before his retirement at the end of the year, despite a volatile political climate and the fact that the full House of the US has not voted on a bill that The House Financial Services Committee previously passed.
“I believe we can get our Stablecoin Regulation passed and signed into law,” McHenry said Tuesday at a Bitcoin Regulation Institute event in Washington. “That will be the first sign that there is hope and that there is bipartisanship when it comes to this world of digital assets.”
While U.S. senators have crafted legislation that would address stablecoins, the Senate Banking Committee has yet to adopt it. Both chambers would need to pass a bill that President Biden would be willing to sign.
By Leonardo Perez
