Coin Center, a cryptocurrency advocacy organization based in the United States, has voiced its concerns about a bill recently introduced in the Senate that aims to establish regulations for payment stablecoins. According to Coin Center, the Lummis-Gillibrand Payment Stablecoin Act, proposed by Senators Kirsten Gillibrand and Cynthia Lummis, would be “bad policy” and unconstitutional due to its proposed ban on algorithmic stablecoins. The organization argues that prohibiting such stablecoins would essentially target code, which could be considered a violation of the First Amendment’s protections.
Coin Center suggests that instead of an outright ban, it would be more appropriate to require issuers of products like Terra to register with the Securities and Exchange Commission (SEC) and make appropriate disclosures. This would effectively make their use as a stablecoin unfeasible, but still allow for innovation and compliance with securities laws. Coin Center’s Executive Director, Jerry Brito, acknowledges the laudable effort to create a regulatory framework for stablecoins in the U.S., but highlights the need for a more inclusive approach.
The proposed bill states that only U.S.-approved issuers would be permitted to issue dollar-backed stablecoins. Coin Center also mentions another bill, the Clarity for Payment Stablecoins Act, which is set for a full floor vote in the House of Representatives. Coin Center considers this bill to have a “not unreasonable” approach to algorithmic stablecoins, as it proposes a two-year moratorium rather than an outright ban.
In related news, the depegging of TerraUSD (UST) from the U.S. dollar was one of the factors contributing to a downturn in the crypto market in 2022. This led to several firms filing for bankruptcy, while U.S. authorities and regulators continued to pursue legal actions against individuals involved in illicit activities.
Senator Sherrod Brown, who chairs the Senate Banking Committee, reportedly stated on April 16 that passing a stablecoin bill would be one of his goals in the legislative session, provided his concerns were addressed. As of now, there are no plans in the House to schedule a floor vote for the Clarity for Payment Stablecoins Act.