US Senator Introduces Bipartisan Stablecoin Bill to Establish Regulatory Framework
U.S. Senators Kirsten Gillibrand and Cynthia Lummis have introduced the Lummis-Gillibrand Payments Stablecoins Act, landmark bipartisan legislation that seeks to establish a regulatory framework for payments stablecoins. The bill aims to protect consumers, promote responsible innovation and crack down on money laundering and illicit finance.
The bill, which senators have been working on for months, would ban “unsecured algorithmic stablecoins” and mandate one-to-one reserves for issuers. It also aims to create a state and federal regulatory framework for stablecoin companies and prevent illegal use of stablecoins.
Senator Gillibrand emphasized the importance of passing a regulatory framework for stablecoins to maintain the dominance of the U.S. dollar, promote responsible innovation, and protect consumers. She expressed confidence that the bill, developed in close collaboration with relevant federal and state agencies, will gain the necessary support in the Senate and House of Representatives.
The bill includes a provision that would allow state non-depository trust companies to issue up to $10 billion in payments stablecoins. Approved entities can issue stablecoins “up to a maximum amount” under their limited-purpose state charter. The bill also highlights the need for proper custody practices for stablecoin issuers, citing the recent FTX incident as an example.
This is not the first time Senators Lummis and Gillibrand have collaborated on legislation focused on cryptocurrency. In the past, we have worked together to introduce legislation that would clarify the roles of regulators such as the Securities and Exchange Commission and the Commodity Futures Trading Commission in regulating digital assets.
The introduction of this stablecoin bill comes amid ongoing concerns from lawmakers and industry leaders about establishing guardrails for stablecoin issuers in the United States. A similar bill, the Clarity for Payment Stablecoins Act, has advanced in the House of Representatives but has yet to see much movement. Senator Sherrod Brown, chairman of the Senate Banking Committee, has expressed interest in addressing stablecoin regulation this legislative session.
The Lummis-Gillibrand Payment Stablecoin Act represents an important step toward establishing a comprehensive regulatory framework for stablecoins in the United States. As the cryptocurrency industry continues to evolve, regulatory clarity and consumer protection become increasingly important.
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