Coin Center, a cryptocurrency advocacy organization based in the United States, has expressed its concerns about a recently introduced bill in the Senate that aims to establish regulations and safeguards for payment stablecoins. The organization argues that the Lummis-Gillibrand Payment Stablecoin Act, introduced by Senators Kirsten Gillibrand and Cynthia Lummis, would be “bad policy” and unconstitutional due to its proposed ban on algorithmic stablecoins. Coin Center believes that banning these stablecoins would essentially target the underlying code, which could be seen as a violation of the First Amendment’s protections.
While Coin Center agrees that it may be reasonable to require issuers of products like Terra to register with the Securities and Exchange Commission (SEC) and provide appropriate disclosures, it believes that an outright ban on a specific business model is unnecessary and detrimental to innovation. The organization argues that as long as a product complies with securities laws, it should be able to enter the market.
Coin Center’s Executive Director, Jerry Brito, acknowledges the efforts to create a regulatory framework for stablecoins in the U.S., describing it as a commendable endeavor. The proposed bill states that only issuers approved by the U.S. would be allowed to issue stablecoins backed by the dollar.
Coin Center also highlights another bill, the Clarity for Payment Stablecoins Act, which is set for a full floor vote in the House of Representatives. The organization believes that this bill takes a more reasonable approach to algorithmic stablecoins by proposing a two-year moratorium instead of an outright ban.
In related news, Senator Sherrod Brown, the chair of the Senate Banking Committee, has reportedly expressed his intention to focus on a stablecoin bill during the legislative session, provided his concerns are addressed. At the time of publication, there were no plans in the House to schedule a floor vote for the Clarity for Payment Stablecoins Act.
The article also mentions the depegging of TerraUSD (UST) from the U.S. dollar as an event that contributed to a downturn in the crypto market in 2022. This led to several firms filing for bankruptcy, and U.S. authorities and regulators pursuing legal action against individuals involved in illicit activities.
Overall, Coin Center raises concerns about the proposed bill and suggests alternative approaches to regulating stablecoins. The organization emphasizes the importance of balancing regulation with innovation in the cryptocurrency industry.