US senators Kirsten Gillibrand and Cynthia Lummis have introduced a new bill for stablecoins.
The bill proposes that stablecoin issuers maintain cash or cash-like reserves in a 1:1 ratio for the stablecoins they release. Furthermore, it suggests banning algorithmic stablecoins that are not backed by a specific reserve.
Introduced as the Lummis-Gillibrand Payment Stablecoins Act, the bill emphasizes that stablecoin issuers and users cannot use these assets for illegal purposes such as money laundering.
Senator Gillibrand stated, “Establishing a legal framework for stablecoins is critical for maintaining the dominance of the US dollar, supporting responsible innovation, protecting consumers, and combating money laundering and illegal finance.”
In order to protect consumers, the Federal Deposit Insurance Corporation is proposed to intervene in the event of a stablecoin issuer’s bankruptcy to facilitate settlements between consumers and the issuer.
According to the bill prepared with the support of Lummis and Gillibrand, federal and state-level institutions will be given the authority to grant licenses to stablecoins.
