U.S. Senators Lummis, Gillibrand Renew Push For Stablecoin Bill

U.S. Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) on Wednesday introduced a new stablecoin bill, aiming to define how these digital tokens will operate within the American financial system.

What Happened: Under the proposed legislation, companies issuing stablecoins for payments would face stricter requirements, Coindesk reported.

The bill specifies that these assets are designed to serve as a medium for payment or settlement and mandates issuers to maintain one-to-one dollar reserves but does not classify the asset as a security.

“The regulatory framework for stablecoins is absolutely critical to maintaining the U.S. dollar’s dominance,” stated Senator Gillibrand.

She highlighted that the legislation aims to preserve the traditional dual banking system while integrating necessary consumer protections, such as banning algorithmically managed stablecoins, which are often undercollateralized and maintain value through computational strategies.

Senator Lummis echoed these sentiments, emphasizing that the bill addresses “the growing demand for our ever-evolving financial industry” and upholds the U.S. dollar's preeminence in the global financial system.

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Both senators have previously collaborated on various digital asset initiatives, including legislation that delineates legal boundaries for decentralized finance and clarifies the extent of federal regulatory oversight.

The legislation also sets a significant operational threshold for stablecoin issuers; a cap of $10 billion has been placed on non-depository trusts’ stablecoin issuance.

Beyond this limit, entities must qualify as depository institutions recognized as national payment stablecoin issuers.

This provision aims to differentiate between smaller enterprises and large-scale operators that might pose systemic risks.

For context, Circle, the largest U.S. stablecoin issuer with $33 billion in USDC USDC/USD in circulation, exceeds this threshold and would require appropriate institutional status under the new law.

Discussions about integrating stablecoin regulation with other essential legislative measures have also surfaced.

Reports from Punchbowl News indicated that Senate Majority Leader Chuck Schumer (D-N.Y.) considered merging stablecoin regulations with the reauthorization of the Federal Aviation Administration, a strategy to ensure passage.

Moreover, Senator Sherrod Brown (D-Ohio), chair of the Senate Banking Committee, suggested he would support advancing stablecoin legislation if it included robust safeguards.

What’s Next: These topics are expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

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