Coin Center, a U.S. cryptocurrency advocacy group, has raised concerns about a newly introduced bill in the Senate aimed at establishing regulations for payments stablecoins. The bill, known as the Lummis-Gillibrand Payments Stablecoin Act and proposed by Senators Kirsten Gillibrand and Cynthia Lummis, has drawn criticism from Coin Center, which considers it both "bad policy" and potentially unconstitutional due to its proposed ban on algorithmic stablecoins. Coin Center argues that such a ban targets the underlying code of these stablecoins, which could infringe upon First Amendment protections.
The organization contends that while it may be reasonable to require issuers of products like Terra to register with the Securities and Exchange Commission (SEC) and make appropriate disclosures, an outright ban on specific business models, such as algorithmic stablecoins, is unnecessary and stifles innovation. Jerry Brito, the executive director of Coin Center, acknowledges the need for establishing a regulatory framework for stablecoins in the U.S., but criticizes the proposed bill for its restrictions on innovation and potential constitutional issues.
The proposed bill stipulates that only U.S.-approved issuers would be permitted to issue U.S. dollar-backed stablecoins. Lawmakers in both the U.S. House of Representatives and the Senate are actively working on legislative solutions for stablecoins. Coin Center views another proposed bill, the Payments Stablecoin Clarity Act, which is scheduled for a full House vote, as taking a more reasonable approach by proposing a two-year moratorium on algorithmic stablecoins rather than an outright ban.
Concerns surrounding stablecoins extend beyond regulatory debates. Events such as TerraUSD's (UST) decoupling from the U.S. dollar have led to downturns in the cryptocurrency market. Additionally, several companies have filed for bankruptcy, and U.S. authorities continue to pursue criminal and civil charges against individuals involved in illegal activities related to stablecoins.
Senator Sherrod Brown, chairman of the Senate Banking Committee, has indicated that addressing stablecoin regulation is a priority for the legislative session, pending resolution of his concerns. However, as of the latest update, the House of Representatives has not yet scheduled a floor vote on the Payments Stablecoin Clarity Act.
