Two US lawmakers unveiled on Wednesday a proposed legislation that will create a regulatory framework for payment stablecoins.
In a statement, senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) say the bipartisan Lummis-Gillibrand Payment Stablecoin Act will protect consumers, enable innovation and promote the dominance of the U.S. dollar while preserving the dual banking system.
-->“In order to meet the growing demand for our ever-evolving financial industry, we need to craft legislation that strikes the careful balance of establishing a clear and workable framework for stablecoins while protecting consumers.”
The senators say that the bill will protect consumers by requiring stablecoin issuers to maintain 1:1 reserves and prohibit the use of unbacked, algorithmic stablecoins—or those whose value does not rely on a reserve of asset, but depends on code-based mechanisms.
If the bill becomes a law, stablecoin issuers will be required to hold one-to-one asset reserves to ensure that the stablecoins they issue are fully backed by cash and cash equivalents. They will also only issue dollar-backed stablecoins.
The statement says the proposed law will likewise prevent illicit use of stablecoins by requiring issuers to comply with U.S. anti-money laundering and sanctions rules, support the US dollar as a medium of digital exchange and counter foreign ambitions to create alternative settlement systems.
Says Gillibrand,
“Passing a regulatory framework for stablecoins is absolutely critical to maintaining the U.S. dollar’s dominance, promoting responsible innovation, protecting consumers and cracking down on money laundering and illicit finance.”
