United States Senators Kirsten Gillibrand and Cynthia Lummis have introduced a groundbreaking bill that aims to establish a regulatory framework for payment stablecoins. The Lummis-Gillibrand Payment Stablecoin Act, which the senators have been working on for several months, is expected to be made public in 2024. The legislation is designed to address key concerns surrounding stablecoins, including the depegging of TerraUSD (UST) from the U.S. dollar in 2022, and aims to ensure responsible innovation, consumer protection, and the prevention of illicit activities.
Senator Gillibrand emphasized the importance of passing a regulatory framework for stablecoins in order to maintain the dominance of the U.S. dollar and combat money laundering and illicit finance. She expressed confidence that the legislation, which was drafted in close collaboration with relevant federal and state agencies, will garner the necessary support in both the Senate and the House.
The text of the 179-page bill outlines various provisions, including the authorization for state non-depository trust companies to issue up to $10 billion in payment stablecoins. Additionally, authorized institutions can issue stablecoins without a specified limit under a limited-purpose state charter. The legislation also aims to establish rules on custody for non-depository trust companies, highlighting the importance of proper custody practices for issuers.
Senator Lummis, who previously called for action against stablecoin issuer Tether in relation to alleged funding of Hamas, has been actively involved in introducing crypto-focused legislation together with Senator Gillibrand. Their previous efforts include a bill focused on establishing a comprehensive regulatory framework for digital assets.
The introduction of the Lummis-Gillibrand Payment Stablecoin Act comes as concerns surrounding stablecoin issuers have been growing among lawmakers and industry leaders. The House of Representatives has already taken steps towards addressing these concerns with the Clarity for Payment Stablecoins Act, which moved out of committee in July 2023. However, progress on the bill has stalled since then.
Senator Sherrod Brown, the chair of the Senate Banking Committee, expressed his intention to prioritize a stablecoin bill in the legislative session, provided his concerns are addressed. While he did not specifically mention the efforts of Senators Lummis and Gillibrand, their proposed legislation aligns with his goals.
The proposed regulations reflect the fear and doubt among lawmakers and industry leaders, as they seek to establish a robust framework for the regulation of cryptocurrencies in the United States.