Senators Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.) are poised to introduce groundbreaking legislation on stablecoins.
The bill’s success could herald a new era of financial innovation and stability, aligning with the dynamic needs of the digital economy.
How New Stablecoin Bill Aims to Eradicate Malpractices
The Senators’ announcement at the Bitcoin Policy Summit in Washington marks a pivotal moment in cryptocurrency regulation. According to Forbes, the Senators plan to unveil the bill later this week or next week.
Amid the regulatory turmoil affecting companies like Coinbase and Binance, this legislative effort is timely. It also addresses the ongoing disputes between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These agencies have been at odds over crypto classification and control.
Read more: Crypto Regulation: What Are the Benefits and Drawbacks?
Gillibrand and Lummis, leveraging their expertise, previously advocated for the Responsible Financial Innovation Act. This act sought to establish a comprehensive regulatory framework for crypto assets. Moreover, it proposed classifying most cryptocurrencies as commodities, thus under the CFTC’s jurisdiction.
Nonetheless, the new stablecoin bill aims to enhance industry integrity and allows nondepository institutions to issue stablecoins under strict regulatory conditions. Consequently, this ensures the industry’s safety and promotes innovation.
“We’re making sure that state and federal regulators have the oversight authority to weed out bad actors while still promoting growth and innovation. And we’re requiring that all issuers make sure that the reserves are back to one-to-one,” Gillibrand said.
The bill outlines two issuance paths for stablecoins. Depository institutions could issue them, following federal and state bank charter regulations. Alternatively, non-depository institutions would be under federal oversight, with states playing a significant regulatory role.
Gillibrand emphasizes the bill’s balanced nature, which is crafted through compromise. It seeks to align the interests of the state entities and the crypto sector.
The stablecoin legislation represents a broader vision for the cryptocurrency market’s integration into the financial mainstream. Stablecoins, as per Gillibrand, could be the regulatory keystone. They might unlock the full potential of cryptocurrencies, leading to a more inclusive financial system.
Read more: A Guide to the Best Stablecoins in 2024
Moreover, ongoing negotiations highlight the importance of bipartisan and bicameral support. Key political figures, including Patrick McHenry (R-N.C.) and Maxine Waters (D-Calif.), are actively involved in these discussions. Previously, these lawmakers have maintained a crypto-friendly stance.
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