Introduction 🌐
You are introduced to the Lummis-Gillibrand Payment Stablecoin Act recently proposed by United States Senators Kirsten Gillibrand and Cynthia Lummis. This act aims to regulate stablecoins by requiring issuers to hold one-to-one cash or cash-equivalent reserves to back their tokens. The bill also prohibits the use of unbacked algorithmic stablecoins for illicit purposes like money laundering. Additionally, it looks to create a regulatory framework that promotes responsible innovation, protects consumers, and prevents illicit finance.
Dual Banking System 🏦
– The bill aims to establish federal and state regulatory regimes for stablecoin issuers to maintain the dual banking system.
– In the United States, national banks are overseen by the federal Office of the Comptroller of the Currency, while state banks are supervised by state regulators.
– Banks can be regulated at both state and federal levels.
– The Lummis-Gillibrand Payment Stablecoin Act would grant federal and state agencies authority over stablecoin chartering and enforcement.
Issuer Insolvency? 💰
– A consumer protection provision in the bill addresses potential stablecoin issuer insolvency.
– The bill allows for Federal Deposit Insurance Corporation conservatorship and resolution in the event of issuer insolvency.
– Details of the receivership regime are provided, including the order of priority, validity of claims, and classification of payment stablecoins as customer assets rather than assets of the issuer.
Prior Bills 📜
– In July 2023, Senators Lummis and Gillibrand reintroduced the Lummis-Gillibrand Responsible Financial Innovation Act.
– The bill aimed to create a comprehensive legal framework for crypto assets.
– The senators had initially introduced the bill in 2022, with subsequent revisions to balance consumer protections and innovation in the evolving crypto asset industry.
Hot Take 🔥
You are now up to date with the latest legislation proposed by Senators Gillibrand and Lummis regarding stablecoins. The Lummis-Gillibrand Payment Stablecoin Act seeks to bring regulatory clarity and consumer protection to the stablecoin industry. As the crypto landscape continues to evolve, it is crucial to establish frameworks that support innovation while safeguarding against illicit activities. Stay informed about developments in the regulatory space to navigate the crypto market effectively.
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