In the US Congress, Senators Kirsten Gillibrand and Cynthia Lummis joined forces to introduce a new bipartisan bill aimed at regulating stablecoins. This bill allows both banks and nonbank trust companies to create stablecoins through special subsidiaries. The proposed regulations require stablecoin issuers to regularly disclose information about the assets backing the stablecoin, their value, and the number of payments issued. State financial regulators would oversee stablecoin-issuing companies, as long as the volume of coins issued remains under $10 billion. Larger firms could face enforcement actions from the Federal Reserve, while coordination with state authorities would be required for smaller firms.

Additionally, the bill prohibits individuals from engaging in the creation or issuance of algorithmic stablecoins. This measure comes in response to the collapse of Terra, an algorithmic stablecoin that caused significant losses in 2022. The Crypto Council for Innovation, based in Washington, expressed support for the legislation, emphasizing the importance of maintaining the US's leadership in innovation and technology. The industry alliance stands ready to continue discussions with lawmakers to ensure that tech remains a bipartisan issue.

Paul Grewal, Coinbase's chief legal officer, recently urged Congress to pass the stablecoin bill, citing its potential to address criminal financial activities involving cryptocurrencies. The proposed regulations aim to strike a balance between fostering innovation and ensuring accountability within the stablecoin market. With bipartisan support, the bill represents a significant step towards regulating the growing influence of stablecoins in the US financial system.

Conclusion:

The introduction of the bipartisan stablecoin bill in the US Congress marks a significant milestone in the regulation of cryptocurrencies. By imposing disclosure requirements and oversight measures, the bill seeks to address concerns surrounding the stability and accountability of stablecoins. With support from industry leaders and lawmakers alike, the bill represents a concerted effort to promote innovation while safeguarding against potential risks within the cryptocurrency market.