Coin Center, an organization that supports cryptocurrencies, is speaking out against a proposed bill aimed at regulating how stablecoins are used and function. In a recent announcement, the US-based group strongly criticized the Lummis-Gillibrand Payment Stablecoin Act. They labeled it as “unconstitutional” and detrimental to innovation.
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Latest Stablecoin Bill Is Bad Policy: Coin Center
On Wednesday, senators Kirsten Gillibrand and Cynthia Lummis presented a bill concerning stablecoin transactions. This legislative initiative, supported by both Democrats and Republicans, aims to safeguard investors’ interests as the use and acceptance of stablecoins as an alternative to the US dollar have grown significantly in recent years.
The Lummis-Gillibrand Stablecoin Act contains several essential elements, such as requiring stablecoin operators to strictly adhere to current US anti-money laundering and sanctions laws. Additionally, this legislation suggests establishing a regulatory structure at both the federal and state levels to preserve the cohesive operation of the existing two-tiered banking system.
Significantly, the bipartisan legislation mandates that every issuer of stablecoins keeps enough reserves to match the coin’s value one-for-one. As a result, this measure effectively prohibits the employment of algorithmic stablecoins, which are stabilized by computer algorithms in response to demand fluctuations. This requirement has sparked strong reactions from the digital currency community, with some critics labeling it as hostile towards cryptocurrencies.
The Coin Center, a crypto advocacy group, strongly criticized this proposed regulation. They argued that banning algorithmic stablecoins could be seen as a restriction on sharing coding ideas, which is unconstitutional based on the protections afforded by the First Amendment.
Despite voicing concerns over algorithmic stablecoins after the Terra-Luna collapse in 2022, Coin Center instead suggests that the US Senate require registrations from issuers of these tokens with the SEC, rather than imposing an outright ban on them. They believe such a move would be more conducive to innovation.
An American pro-crypto organization also brings up an alternative approach in the “Clarity for Payment Stablecoins Act” introduced in 2021. This act aims to require new algorithmic stablecoins to go through a two-year waiting period before launching. Coin Center, while not in favor of this delay, considers the legislation acceptable since it doesn’t involve an outright ban or infringe on developers’ creative freedom.
Stablecoin Supply Rises By 22% In 2024
The global stablecoins market has persistently grown throughout the year 2024, as indicated in data from DeFiLlama. The total market capitalization of stablecoins has risen by approximately 21.95%, increasing from $139.342 billion on January 1, to its present value of $158.957 billion.
Among these stablecoins, USDT (Tether USD) holds the largest share with a market dominance of 69.10% and a market cap of $109.84 billion. USDC (USD Coin), is the next most significant with a 20.90% share and a market cap of $33.223 billion. Other notable stablecoins include DAI, FUSD (First Digital USD), and USDe (Athena USDe).
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2024-04-21 06:11