According to credit rating agency S&P Global Ratings, passage of the latest stablecoin bill submitted to the Senate could give banks a boost in entering the stablecoin market.
that much Lummis-Gillibrand Payment Stablecoin Law, introduction Last week, Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, R-DY, will seek to clarify regulations that “should encourage banks to enter the stablecoin market,” the rating agency said. memo On Wednesday. However, Tether would not be accepted under the proposed law, which could reduce demand for stablecoins based outside the United States.
“Approval of the stablecoin bill will accelerate institutional blockchain innovation, particularly for tokenization or digital bond issuance related to on-chain payments,” the rating agency said. “The growth of institutional use cases for stablecoins will create opportunities for banks as stablecoin issuers and may also reduce Tether’s dominance in the global stablecoin market.”
If the bill passes, stablecoin issuers would be required to hold a one-to-one reserve of cash or cash equivalents to back their tokens. It also banned algorithm-based stablecoins and said issuers and users cannot use stablecoins for illegal or unauthorized purposes, such as money laundering.
Banks are in, Tether is out
If passed, the new law would give banks a competitive advantage by limiting issuance by institutions without banking licenses to a maximum of $10 billion, S&P Global said.
Tether’s dominance in the global stablecoin market could be slowed because it would not be permitted to be issued by non-US entities and the bill, if passed, could slow it down, the rating agency added.
““This means that U.S. companies cannot hold or trade Tether, which could reduce demand while boosting U.S.-issued stablecoins,” he said. “However, Tether trading activity is primarily in emerging markets outside the U.S. “It’s happening, and it’s driven by retail users and remittances.”
Tether did not immediately respond to a request for comment. According to data from The Block Research team, USDT is the largest stablecoin by market capitalization.
Ohio Senator Sherrod Brown will play an integral role in passing stablecoin legislation. The Chairman of the Senate Banking Committee said: bloomberg Last week, he said he was open to pushing for stablecoin legislation, along with legislation that would allow banks to do business with marijuana businesses and other measures. The House of Representatives is also preparing a stablecoin bill.
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