Some people argue that the recently proposed stablecoin regulation Bill, which Senators Cynthia Lummis and Kirsten Gillibrand are co-sponsoring, could severely limit innovative advancements in the US.
The Now Popular Stablecoin Regulation Bill
Last week, Senators Lummis and Gillibrand presented a 179-page proposal to regulate and clarify the legal status of stablecoin cryptocurrencies, which are linked to traditional currencies like the US dollar.
Furthermore, the suggested legislation does not allow for unbacked “algorithmic stablecoins” labeled as such to exist. This carries substantial consequences for software engineers and the tech industry at large.
The bill emphasizes the implementation of a FDIC conservatorship and resolution process in case an issuer goes bankrupt, which is one of its key provisions. While the proposed Congressional legislation on stablecoins has generated buzz within the cryptocurrency community, it has not elicited the same level of enthusiasm from the traditional finance sector.
Hilary Allen, a professor at American University’s Washington College of Law, expresses concern over the bill’s contents. Given her extensive background in researching and discussing the potential risks crypto products pose to the financial system’s stability, it is understandable that she would be apprehensive about this legislation.
Based on the upcoming stablecoin legislation, he thinks we’re on the brink of a major catastrophe.
Backlash and Support Trails Stablecoin Bill
Allen expresses doubt over considering stablecoins as valid forms of payment due to the unreliable nature and insufficient capacity of their underlying blockchains.
The professor highlighted that the FDIC receivership provision in the proposed Lummis-supported stablecoin legislation might lead to significant increases in banking fees for American consumers.
Another perspective on this issue is that while some voices express opposition to the Lummis-Gillibrand Act due to its potential conflict with the bill’s subtle antagonism towards it, there are also arguments made that the legislation infringes upon First Amendment rights, specifically regarding the ban on algorithmic stablecoins. For instance, Coin Center, a prominent crypto advocacy group, has voiced concerns about this regulation, asserting potential First Amendment violations.
The head of the cryptocurrency advocacy organization, Jerry Brito (CEO), praised the government’s determination to regulate stablecoins within their jurisdiction. Following the downfall of Terraform Labs in 2022, regulatory actions towards the crypto sector have gained significant momentum.
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2024-04-23 01:53