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Senators introduce bill regulating stablecoins! 🚀💰

Senators introduce bill regulating stablecoins! 🚀💰

Regulating Stablecoins: New Bill Proposed by Senators Lummis and Gillibrand

In a bid to regulate stablecoins effectively within the United States, Senators Cynthia Lummis and Kirsten Gillibrand have collaborated on a new bill. This proposed legislation aims to define the operational framework for stablecoins, marking a significant step towards targeted regulation in the crypto market.

Defining Payment Stablecoins

The bill specifically outlines payment stablecoins as digital assets pegged to the U.S. dollar, primarily intended for facilitating payments or settlements. Under this legislation:

  • Stablecoin issuers would be required to ensure their tokens are fully backed by reserve assets.
  • Conversion to dollars must be mandatory for issuers, with the asset itself not classified as a security.
  • Non-depository trust companies registered with the Federal Reserve Board of Governors or authorized depository institutions would be eligible as issuers, subject to state and federal regulatory oversight.

Operational & Reserve Requirements

While focusing on creating a well-defined regulatory environment for stablecoins, the bill imposes specific operational and reserve requirements:

  1. Stablecoin issuers must establish subsidiaries dedicated to issuing stablecoins.
  2. Issuers are obligated to exclusively deal in dollar-backed tokens.
  3. Public disclosure of reserve assets backing stablecoins and the use of a non-depository trust as a custodian are mandated.

Limitations and Thresholds

The bill introduces a $10 billion limit for non-depository trust companies issuing payment stablecoins, beyond which they must become authorized national payment stablecoin issuers:

  • Circle, the largest U.S.-based stablecoin issuer with $33 billion in outstanding USDC, does not currently fall under depository trust institution classification.
  • Paxos, the next largest issuer, holds a limited-purpose trust charter through the New York Department of Financial Services but remains below the $10 billion limit.

Future of Stablecoin Legislation

Stablecoin legislation has been a focal point for regulatory efforts in the U.S. crypto market:

  • Senators Lummis and Gillibrand have introduced multiple bills addressing digital assets, emphasizing the need for regulatory clarity.
  • The House Financial Services Committee, represented by Patrick McHenry and Maxine Waters, has also been actively working on stablecoin legislation.

Hot Take: Progressing Towards Stablecoin Regulation

As regulators and lawmakers collaborate on defining the regulatory landscape for stablecoins, the proposed bill by Senators Lummis and Gillibrand signals a step forward in fostering financial innovation while ensuring consumer protection in the realm of digital assets.

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Senators introduce bill regulating stablecoins! 🚀💰