‘Bitcoin Senator’ Lummis leads the push for US stablecoin legislation

Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) introduced new stablecoin legislation on Wednesday, ending years of attempts by lawmakers to enact a comprehensive framework for cryptocurrency asset classes in the United States. has been updated.

that much 117 page bill It contains various definitions relevant to the sector and outlines rules at the state and federal level for companies to issue so-called payment stablecoins. The bill also requires companies to conduct stablecoin activities through subsidiaries. Stablecoins are cryptocurrency assets that are pegged to and backed by fiat currency and maintain a stable price.

The new requirements differ from how some companies have handled stablecoins in the past. For example, Binance, which is not a bank, once offered its Binance USD (BUSD) stablecoin through Paxos Trust, which is not a subsidiary of the cryptocurrency exchange. However, the company’s support for BUSD has ended. Paxos Warning of potential enforcement action by the SEC last year.

Depending on the outstanding value of the issued stablecoin, different regulations apply to the company. The bill, called the Lummis-Gillibrand Payment Stablecoin Act, would place a $10 billion cap on state regulators’ ability to authorize and oversee non-depository trust companies involved in the stablecoin space. Applies.

“This bill preserves the dual banking system that is critical to maintaining the parity enjoyed by state and federal financial institutions,” Lummis said. said On Twitter (aka X) on Wednesday.

Last week, Senate Majority Leader Chuck Schumer (D-NY) met with key members of the House Financial Services Committee to discuss stablecoin legislation. punchbowl news. At the meeting, lawmakers reportedly discussed including bipartisan legislation in a bill to reauthorize the Federal Aviation Administration (FAA).

“I think there is momentum,” Gillibrand said. interview In ~ CNBCThis is Wednesday’s “Squawk Box.” “It could be done very quickly as part of the FAA reauthorization.”

Often referred to as the “Bitcoin Senator,” Lummis’s advocacy for cryptocurrencies on Capitol Hill dates back to his 2020 election victory. But Lummis believes in its potential to solve today’s financial problems and said he bought his first bitcoin in 2013. system.

The new law makes it illegal for U.S. stablecoin issuers to issue algorithmic stablecoins. Instead of using assets to back the value of stablecoins, algorithmic coins keep their price pegged to the dollar (or other assets) through trading incentives.

The bill also requires stablecoin issuers to maintain a one-to-one reserve for their stablecoins. Fiat-backed stablecoins are often pegged to the dollar through a mix of liquid assets such as U.S. Treasury bonds and cash.

Algorithmic stablecoins have garnered attention on Capitol Hill. The collapse of TerraUSD In 2022, more than $40 billion in investor wealth was lost. Last February, U.S. Treasury Secretary Janet Yellen said: still a priority This is for Congress to pass a bill regulating the stablecoin market.

The Senate bill filed Wednesday follows the introduction of other cryptocurrency-related bills, including: Lummis-Gillibrand Responsible Finance Innovation Act In 2022.

Legislation that delineates the boundaries between the regulatory authority of the Securities and Exchange Commission and the Commodity Futures Trading Commission is as follows: reintroduced In 2023.

So far, efforts to regulate cryptocurrencies on Capitol Hill have fallen through the legislative vine. But Lummis is hopeful the senators’ efforts can pay off before election season gets too intense.

“We’re going to keep pushing for weeks, not months,” Lummis said Wednesday on “Squawk Box,” adding that Congress is quickly approaching a time when “politics takes over policy.”

Editors: Stacy Elliott and Andrew Hayward