Two US lawmakers unveiled on Wednesday proposed legislation that will create a regulatory framework for payment stablecoins.
In a statement, senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) say the bipartisan Lummis-Gillibrand Payment Stablecoin Act will protect consumers, enable innovation and promote the dominance of the U.S. dollar while preserving the dual banking system.
“In order to meet the growing demand for our ever-evolving financial industry, we need to craft legislation that strikes the careful balance of establishing a clear and workable framework for stablecoins while protecting consumers.”
The senators say that the bill will protect consumers by requiring stablecoin issuers to maintain 1:1 reserves and prohibit the use of unbacked, algorithmic stablecoins — or those whose value does not rely on a reserve of asset, but depends on code-based mechanisms.
If the bill becomes a law, stablecoin issuers will be required to hold one-to-one asset reserves to ensure that the stablecoins they issue are fully backed by cash and cash equivalents. They will also only issue dollar-backed stablecoins.
The statement says the proposed law will likewise prevent illicit use of stablecoins by requiring issuers to comply with U.S. anti-money laundering and sanctions rules, support the US dollar as a medium of digital exchange and counter foreign ambitions to create alternative settlement systems.
Says Gillibrand,
“Passing a regulatory framework for stablecoins is absolutely critical to maintaining the U.S. dollar’s dominance, promoting responsible innovation, protecting consumers and cracking down on money laundering and illicit finance.”
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