US Senators Kirsten Gillibrand and Cynthia Lummis have introduced a new bill for stablecoins.
The bill proposes that stablecoin issuers must maintain a 1:1 reserve of cash or cash equivalents for the stablecoins in circulation. It also 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 said, “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.”
To protect consumers, the bill proposes the involvement of the Federal Deposit Insurance Corporation in case of a stablecoin issuer’s bankruptcy, in order to negotiate between consumers and the issuer.
According to the bill prepared with the support of Lummis-Gillibrand, federal and state regulatory authorities will be authorized to issue licenses for stablecoins.
