- Senators Cynthia Lummis and Kirsten Gillibrand of the United States submitted a measure regulating stablecoins.
The bill was created in collaboration with the Federal Reserve and the New York State Department of Financial Services, according to a press statement. To support their tokens, stablecoin issuers need to maintain a 1:1 ratio of cash or cash equivalent reserves.
Furthermore, the measure forbids unbacked algorithmic stablecoins. The sponsors of the bill contend that stablecoins cannot be used for illicit or unlawful activities, such as money laundering, by either the issuer or the consumers.
The purpose of the measure, according to the explanatory note, is to provide a framework that promotes “responsible” innovation. The bill aims to use stablecoins to boost the potential of the digital asset market, expedite cross-border transactions, and reduce expenses.
Early in April 2024, word spread that a different stablecoin bill was in the works. It evolved into a response to the legislation that was introduced in 2023’s spring.
The latter calls for algorithmic stablecoins to be temporarily prohibited and the Fed to have the authority to subordinate issuing enterprises.
Since her plan gives state regulators more authority over monitoring, Gillibrand referred to it as a fair compromise. Following publication, Sherrod Brown, the chairman of the U.S. Senate Banking Committee, declared that, given specific circumstances, he would be willing to vote in favor of the bill’s adoption.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
