US lawmakers Kirsten Gillibrand and Cynthia Lummis have jointly introduced the Payment Stablecoin Act, known as the Lummis-Gillibrand Act. This bipartisan initiative aims to set forth regulations governing payment stablecoins, focusing on consumer protection, fostering innovation, and combating financial crimes such as money laundering.
The proposed legislation, a product of months of collaborative effort, specifically targets “unbacked, algorithmic stablecoins,” requiring issuers to maintain one-to-one reserves. Additionally, it outlines regulatory frameworks at both state and federal levels for companies dealing with stablecoins, with a key objective of preventing illicit activities involving these digital assets.
Senator Gillibrand underlined the necessity of establishing regulatory measures for stablecoins to uphold the supremacy of the US dollar, encourage responsible technological advancements, and safeguard consumer interests. She expressed optimism regarding the bill’s prospects in garnering support across the Senate and the House, highlighting the extensive consultation with relevant governmental bodies during its development.
Noteworthy provisions of the bill include enabling state non-depository trust entities to issue payment stablecoins up to $10 billion, subject to a limited-purpose state charter. Moreover, it stresses the significance of secure custody practices for stablecoin issuers, drawing attention to incidents like the one involving FTX as a cautionary example.
This collaborative effort by Senators Lummis and Gillibrand builds upon their prior work in the realm of cryptocurrency-focused legislation, aimed at clarifying the regulatory roles of entities such as the Securities and Exchange Commission and the Commodity Futures Trading Commission in overseeing digital assets.
The introduction of the Payment Stablecoin Act responds to the growing concerns among policymakers and industry stakeholders regarding the necessity of robust oversight for stablecoin issuers within the US. While a similar bill, the Clarity for Payment Stablecoins Act, has seen progress in the House of Representatives, its advancement remains pending. Senator Sherrod Brown, chair of the Senate Banking Committee, has signaled a keen interest in addressing stablecoin regulations during the current legislative session.
The Lummis-Gillibrand Payment Stablecoin Act signifies a significant stride towards establishing a comprehensive regulatory infrastructure for stablecoins in the US. In an era of rapid evolution within the crypto sphere, regulatory clarity and consumer safeguarding emerge as paramount priorities.
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