US Senators Cynthia Lummis and Kirsten Gillibrand have introduced a legislative proposal to regulate stablecoins — digital currencies pegged to stable assets.
The bill aims to establish clear operational guidelines for stablecoin issuers in the United States.
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The proposed legislation defines a payment stablecoin as any dollar-pegged digital asset used for payments or settlements.
Key provisions of the bill mandate 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.
In their statements, both senators emphasized the importance of this legislation. Gillibrand highlighted that the regulatory framework is "absolutely critical to maintaining the US dollar's dominance," adding:
It protects consumers by mandating one-to-one reserves, prohibiting algorithmic stablecoins, and requiring stablecoin issuers to comply with US anti-money laundering and sanctions rules. To draft the strongest bill possible, our offices worked closely with the relevant federal and state agencies and I’m confident this legislation can earn the necessary support in the Senate and the House.
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.
With this bill, the Senators continue their months of collaborative efforts to shape the regulatory framework of stablecoins.
