Coin Center, a US-based advocacy organization for cryptos, has raised concerns regarding the Senate establishing a regulatory bill for stablecoins.
Senators Kirsten Gillibrand and Cynthia Lummis have introduced the Lummis-Gillibrand Payment Stablecoin Act. According to the legislation, Coin Center argued in an April 19 notice that the proposed prohibition on algorithmic stablecoins would be “bad policy” and unconstitutional.
The group claimed that prohibiting such stablecoins would be equivalent to targeting code, which would be unconstitutional under the First Amendment.
Coin Center stated, “[I]t might make sense to require issuers of products such as Terra to register with the SEC and make appropriate disclosures (which would render their use as stablecoins practically impossible), but an outright ban on a specific business model is anti-innovation and unnecessary.” Introducing a product to the market should be possible if one complies with the securities laws.
According to Coin Center Executive Director Jerry Brito, establishing a regulatory framework for stablecoins in the United States is a “laudable effort.” As per the text of the proposed legislation, the issuance of dollar-backed stablecoins would be restricted to issuers authorized by the United States.
Legislators in both the Senate and the House of Representatives are collaborating to develop legislative remedies for the issue of stablecoins. In proposing a two-year moratorium instead of an outright ban, the Clarity for Payment Stablecoins Act—a bill scheduled for a complete floor vote in the House—had a “not unreasonable” stance on algorithmic stablecoins, according to Coin Center.
The decoupling of TerraUSD (UST) from the U.S. dollar was a factor in the 2022 cryptocurrency market decline. U.S. authorities and regulators persisted in pursuing criminal and civil charges against individuals implicated in unlawful activities while several firms initiated bankruptcy proceedings.
According to reports, Senate Banking Committee chairman Sherrod Brown stated on April 16 that he would like to see a measure addressing his concerns regarding stablecoins become one of his legislative priorities. As of the time of publication, the House had no intention of legislating on the Clarity for Payment Stablecoins Act via floor vote.
