U.S. Senators Kirsten Gillibrand and Cynthia Lummis have introduced a bill aimed at regulating stablecoins, a type of digital currency pegged to a stable asset like the U.S. dollar. Developed in collaboration with the Federal Reserve and the New York State Department of Financial Services, the bill mandates that stablecoin issuers maintain reserves of cash or cash equivalents at a 1:1 ratio to support their tokens.
Furthermore, the legislation proposes a prohibition on unbacked algorithmic stablecoins, emphasizing the prevention of stablecoin misuse for illicit activities such as money laundering. The bill’s proponents underscore the importance of fostering responsible innovation within the digital asset industry while ensuring compliance with regulatory standards.
This legislative initiative seeks to establish a regulatory framework conducive to facilitating faster cross-border transactions, reducing fees, and harnessing the potential of stablecoins for broader financial inclusion. The bill represents a response to previous legislative proposals and aims to strike a balance between regulatory oversight and fostering innovation.
Senator Gillibrand has characterized the bill as a reasonable compromise, as it entrusts oversight responsibilities to state regulators while addressing concerns surrounding stablecoin regulation. The bill’s reception has garnered support from key figures like Senator Sherrod Brown, Chair of the U.S. Senate Banking Committee, who expressed readiness to endorse its passage under specified conditions.