Coin Center Challenges New US Stablecoin Bill
The Lummis-Gillibrand Payment has sparked debate within the cryptocurrency community
April 21, 2024 03:00 PM
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TL;DR The pro-crypto advocacy group Coin Center has publicly criticized the proposed Lummis-Gillibrand Payment Stablecoin Act, calling it unconstitutional and anti-innovation. The bill aims to regulate stablecoin operations, including a controversial ban on algorithmic stablecoins.
Coin Center, a prominent pro-crypto organization, is taking a stand against the recently introduced Lummis-Gillibrand Payment Stablecoin Act.
In a statement released on Friday, the advocacy group vehemently opposed the bill, labeling it as 'unconstitutional' and a hindrance to innovation within the stablecoin segment of the cryptocurrency industry.
Senators Kirsten Gillibrand and Cynthia Lummis introduced this bipartisan legislation to safeguard investors amidst the soaring popularity of stablecoins as an alternative to traditional fiat currencies.
The Lummis-Gillibrand Payment Stablecoin Act mandates stablecoin issuers to adhere to stringent anti-money laundering and sanction regulations. It also proposes a dual banking system regulatory framework and requires issuers to maintain one-to-one reserves.
That effectively bans algorithmic stablecoins, sparking significant backlash from the crypto community. Coin Center argues that this prohibition equates to a ban on code publication, violating the First Amendment Rights.
Coin Center's Counter-Proposal In light of the Terra-Luna ecosystem collapse in 2022, Coin Center acknowledges the concerns surrounding algorithmic stablecoins. However, they suggest a registration process with the SEC for issuers rather than a complete ban. They argue this approach supports innovation while addressing regulatory concerns.
Furthermore, Coin Center contrasts the bill with the 'Clarity for Payment Stablecoins Act' of 2021, which proposes a two-year moratorium for newly launched algorithmic stablecoins, a measure Coin Center finds more palatable than an outright ban.
They believe this demonstrates a more reasonable approach to fostering innovation while ensuring regulatory compliance.
"Prohibiting the use of algorithmic stablecoins can be interpreted as a ban on publishing code which would be unconstitutional by the provisions of the First Amendment Rights."
In related news, the global stablecoins market has grown substantially through 2024. Data from DeFiLlama indicates a 21.95% increase in the total stablecoin market cap, with Tether USD (USDT) and USD Coin (USDC) leading the market.
This growth underscores the increasing significance of stablecoins in the digital asset ecosystem, highlighting the importance of developing a regulatory framework that supports innovation while protecting investors.
