Stablecoin Regulation Gaining More Traction in US Congress

Sens. Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.) have introduced a new bipartisan stablecoin bill. 

The bill makes it possible for banks and nonbank trust companies to issue stablecoins via dedicated subsidiaries. 

On a monthly basis, stablecoin issuers would be required to disclose the assets backing the stablecoin, the value of the assets as well as the number of outstanding payments. 

State financial regulators would be allowed to supervise and authorize stablecoin-issuing companies if the outstanding volume of their issued coins does not exceed $10 billion. Stablecoin firms that are bigger in scope could face enforcement actions from the Federal Reserve. For firms whose volume falls below $10 billion, such actions would have to be coordinated with state authorities. 

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The legislation would also make it unlawful for any person to be involved in the business of "issuing, creating, or originating" algorithmic stablecoins. This follows the collapse of Terra, the chaotic algorithmic stablecoin that famously collapsed in 2022 and wiped out more than $40 billion in value. 

In its social media statement, the DC-based Crypto Council for Innovation welcomed the new legislation, adding that it was ready to continue its dialogue with lawmakers. 

"We believe it’s crucial for the US to maintain its leadership role, prioritize innovation, and keep tech a bipartisan issue. We appreciate that lawmakers are working on this important topic and stand ready to continue our dialogue with them," the industry alliance said. 

As reported by U.Today, Paul Grewal, chief legal officer at Coinbase, recently urged Congress to pass the stablecoin bill, arguing that it would help to deal with the small percentage of criminal financial activity that is conducted with crypto.