Debunking The Proposed Stablecoin Legislation: A Closer Look
Recently, senators Kirsten Gillibrand and Cynthia Lummis unveiled the Lummis-Gillibrand Payment Stablecoin Act, aiming to regulate stablecoin payments. This proposed bipartisan legislation intends to safeguard investors’ interests amid the increasing popularity of stablecoins as an alternative to the US dollar. Here’s a breakdown of the key aspects of this bill:
– **Compliance Requirements**:
– The bill mandates strict compliance with existing US anti-money laundering and sanction regulations by stablecoin operators.
– It proposes the establishment of a regulatory framework at both federal and state levels to maintain the dual banking system smoothly.
– **Reserve Requirements**:
– All stablecoin issuers must maintain one-to-one reserves, effectively banning algorithmic stablecoins that adjust their supply based on demand.
– **Reaction from Coin Center**:
– Coin Center criticized the bill, arguing that outlawing algorithmic stablecoins could violate the freedom of speech guaranteed by the First Amendment.
– While acknowledging concerns over algorithmic stablecoins, Coin Center suggests registration with the SEC for issuers as an alternative to a complete ban.
Examining The Growth of Stablecoin Market in 2024
Amidst the ongoing regulatory conversations, the global stablecoin market has seen significant growth in 2024. Here are some key findings related to stablecoin supply:
– **Market Expansion**:
– The total stablecoins market cap increased by 22% in 2024, reaching $158.957 billion from $139.342 billion at the beginning of the year.
– **Market Dominance**:
– Tether USD (USDT) remains the dominant stablecoin, accounting for 69.10% of the market cap with $109.84 billion.
– USD Coin (USDC) follows as the second-largest stablecoin, capturing 20.90% of the market with a cap of $33.223 billion.
– Other notable stablecoins include Dai (DAI), First Digital USD (FUSD), and Athena USDe (USDe).
Hot Take: Coin Center Challenges Proposed Stablecoin Ban
Pro-crypto organization Coin Center strongly opposes the Lummis-Gillibrand Payment Stablecoin Act, labeling it as detrimental to innovation and free speech. By critiquing the bill’s limitations on algorithmic stablecoins, Coin Center advocates for a more balanced approach that fosters creativity while addressing potential risks in the stablecoin ecosystem.
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