Legislation has been introduced by United States Senators Kirsten Gillibrand and Cynthia Lummis to establish a regulatory framework for payment stablecoins. The legislation aims to prohibit algorithmic stablecoins that are not backed by reserves, likely referencing TerraUSD’s depegging from the US dollar in 2022, and requires issuers to maintain one-to-one reserves. It also aims to create federal and state regulatory regimes for stablecoin issuers while preserving the dual banking system. The bill allows state non-depository trust companies to issue up to $10 billion in payment stablecoins, and authorized institutions can issue stablecoins of any amount under a limited-purpose state charter. The legislation also addresses rules on custody for non-depository trust companies and upholds the current system of state and federal charters. However, advocacy group Coin Center has expressed concerns about the bill, arguing that banning algorithmic stablecoins could be unconstitutional and a violation of the First Amendment. Coin Center suggests that the Clarity for Payment Stablecoins Act, which proposes a two-year moratorium on algorithmic stablecoins instead of an outright ban, takes a more reasonable approach. In other news, Canada is expected to apply the international Crypto-Asset Reporting Framework (CARF) for taxation by 2026. The CARF would impose new reporting requirements on crypto asset service providers, including cryptocurrency exchanges and brokers, and crypto-asset automated teller machine operators. These providers would need to report transactions between crypto assets and fiat, as well as transactions between different crypto assets, to the Canada Revenue Agency. Additionally, an Arkansas Senate committee has passed two bills that could restrict cryptocurrency mining within the state. The bills address concerns such as noise reduction, foreign ownership, and the proximity of crypto mines to residential areas. The committee will continue to discuss the issue and gather public input. Lastly, Binance crypto exchange is set to return to India after a four-month ban. The company has paid a $2 million fine for noncompliance and will be the second overseas exchange, after KuCoin, to resume operations in the country. Binance previously accounted for over 90% of Indian crypto trading volume before the ban. The company has also obtained a Dubai Virtual Asset Service Provider (VASP) license after its co-founder, Changpeng Zhao, relinquished his voting power in the exchange’s local entity.
Law Decoded: Legislation by Lummis-Gillibrand aims to outlaw algorithmic stablecoins