Crypto Flexs
  • DIRECTORY
  • CRYPTO
    • ETHEREUM
    • BITCOIN
    • ALTCOIN
  • BLOCKCHAIN
  • EXCHANGE
  • ADOPTION
  • TRADING
  • HACKING
  • SLOT
Crypto Flexs
  • DIRECTORY
  • CRYPTO
    • ETHEREUM
    • BITCOIN
    • ALTCOIN
  • BLOCKCHAIN
  • EXCHANGE
  • ADOPTION
  • TRADING
  • HACKING
  • SLOT
Crypto Flexs
Home»TRADING NEWS»New stablecoin legislation proposed in the US – what are the pros and cons?
TRADING NEWS

New stablecoin legislation proposed in the US – what are the pros and cons?

By Crypto FlexsMay 6, 20244 Mins Read
Facebook Twitter Pinterest LinkedIn Tumblr Email
New stablecoin legislation proposed in the US – what are the pros and cons?
Share
Facebook Twitter LinkedIn Pinterest Email

Elements of the Payment Stablecoin Act have the potential to benefit American consumers, but critics claim other parts are “unconstitutional.”

Republican Cynthia Lummis and Democrat Kirsten Gillibrand have become a bipartisan, pro-crypto player in Congress, leading efforts to provide regulatory clarity for digital assets in the United States.

Their recent legislative efforts have focused on stablecoins, and both argue that a well-defined framework is needed to protect consumers and ensure the dollar maintains its dominant position as digital payments continue to gain momentum. I did.

One of the most important proposals of the Lummis-Gillibrand Payment Stablecoin Act is to completely ban algorithmic stablecoins in the United States, preventing coins that are not backed by real assets from being released. This is a clear nod to the disaster surrounding Terraform Labs’ UST, which went into a death spiral after losing ground against the dollar in 2022.

This particular proposal has raised concerns among some advocacy groups, namely Coin Center. The non-profit has made it clear that it does not like UST, but argues that a blanket ban on algorithmic stablecoins is “not only bad policy, it is unconstitutional.” Jerry Brito, the think tank’s executive director, argued:

“(Unlike Terra) there could be fully decentralized ‘algorithmic stablecoins’ without any commitments made by the issuer or promoter. In such cases, a ban on ‘algorithmic stablecoins’ would essentially be a ban on publishing code that violates free speech.”

jerry burrito

Other areas of the Payment Stablecoin Act also raise more questions than answers. First of all, the status of some digital assets, such as MakerDAO’s decentralized product DAI, is unclear.

There may also be troubling issues for Circle, which issues USDC, the world’s second-largest stablecoin with a market capitalization of $33 billion at the time of this writing. The company is headquartered in Massachusetts, which means it will definitely be subject to the Payment Stablecoin Act. Circle would not be able to operate in its current form without becoming a regulated depository institution, according to the proposal that the trust company could only issue up to $10 billion in stablecoins.

While both politicians rightly claim that USD-denominated stablecoins based in other jurisdictions are “currently writing the rules for the dollar,” it is also unclear how those rules might apply to Tether. USDT dominates the industry with a market capitalization of $110 billion, but is based overseas. A study by S&P Global found that about 80% of the $145 billion stablecoin market pegged to the U.S. dollar was issued outside the United States.

Source: S&P Global

a promising step

Elements of the Payment Stablecoin Act have the potential to benefit U.S. consumers.

First of all, any legislation that opens the door to mass adoption of stablecoin payments would be welcomed. As Lummis and Gillibrand point out, cross-border transactions using legacy systems can take up to 10 days to process and are often subject to harsh fees. In contrast, stablecoins provide near-instant payments at a much lower cost.

This could be a game-changing change for foreign workers sending money back to their families in their home countries. According to data from the World Bank, the sector will be worth about $669 billion in 2023, but the typical cost of remittances is 6.2%. That’s $41 billion that could help local economies. It’s all consumed by transaction fees.

If signed into law, these proposals would introduce safeguards to ensure that all stablecoins are adequately backed on a one-to-one basis by dollar reserves and introduce FDIC deposit insurance in case the issuer goes bankrupt. The banking sector currently automatically protects customers with an amount of $250,000.

Lummis and Gillibrand also argue that the move could ease the prospects for de-dollarization as major economies around the world work to build their own financial systems. “It’s about protecting American values ​​and making the dollar the primary currency of the $4.5 trillion global economy.” S&P Global principal credit analysts Mohamed Damak and Andrew O’Neill went on to suggest that approval of the bill could lead to banks issuing their own stablecoins.

The big question now is whether and how the Payments Stablecoin Act will pass. Global law firm Akin warned:

“With the focus on the upcoming election and the slowdown in legislative activity, opportunities to get legislation passed through Congress are limited.”

Akin

Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

Related Posts

How Algorand is quietly building the future of finance around the world

June 5, 2025

Lightchain AI rises to leading picks, and Litecoin is interested in legacy as interest is reduced.

June 5, 2025

Ripple Stablecoin RLUSD gets a green line to use in Dubai Difc.

June 4, 2025
Add A Comment

Comments are closed.

Recent Posts

ZK-Proof Blockchain Altcoin Lagrange (LA) New Coinbase

June 6, 2025

ZK-Proof Blockchain Altcoin Lagrange (LA) New Coinbase

June 6, 2025

Bitfinex updates version 1.116 improved platforms

June 6, 2025

Encryption leverage: 2025 trend and change analysis

June 6, 2025

Why DEGO Price tank 60%after moving USD1 Stablecoin

June 6, 2025

SEI Network opens up the way of autonomous AI economy.

June 6, 2025

SEI hit 621K wallet and $ 930m tvL, but two regions should pay attention.

June 6, 2025

Bitcoin Is An Unreplicable Lifeline In Authoritarian Regimes

June 6, 2025

COREWEAVE is a NVIDIA GB200 Super Chip that achieves recorded MLPERF benchmarks.

June 6, 2025

Bitcoin dives for less than $ 102K in fading momentum and macroscopic uncertainty.

June 6, 2025

Arca EXEC writes a scratch on Circle after IPO

June 6, 2025

Crypto Flexs is a Professional Cryptocurrency News Platform. Here we will provide you only interesting content, which you will like very much. We’re dedicated to providing you the best of Cryptocurrency. We hope you enjoy our Cryptocurrency News as much as we enjoy offering them to you.

Contact Us : Partner(@)Cryptoflexs.com

Top Insights

ZK-Proof Blockchain Altcoin Lagrange (LA) New Coinbase

June 6, 2025

ZK-Proof Blockchain Altcoin Lagrange (LA) New Coinbase

June 6, 2025

Bitfinex updates version 1.116 improved platforms

June 6, 2025
Most Popular

BONK Soars 52%: Should You Ride the Wave or Cash Out?

April 23, 2024

FTX unveils multibillion-dollar repayment plan to compensate creditors

May 8, 2024

China promises to strengthen NFT and dapp development despite ban on cryptocurrency trading

December 20, 2023
  • Home
  • About Us
  • Contact Us
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions
© 2025 Crypto Flexs

Type above and press Enter to search. Press Esc to cancel.