Senators Propose New Rules for Digital Currency to Boost Safety and Transparency

Senators Propose New Rules for Digital Currency to Boost Safety and Transparency

BlockchainRegulation

By Jakub Lazurek

18 Apr 2024 (3 months ago)

1 min read

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Senators unveil a bill to regulate stablecoins, ensuring they're dollar-backed for safety

US Senators Cynthia Lummis and Kirsten Gillibrand have proposed a new bill to regulate stablecoins to increase financial stability and transparency.

This legislation demands that all stablecoins be backed by the US dollar and have full asset reserves.

Stablecoins are digital currencies designed to have a stable value by linking to assets like the US dollar.

Due to concerns about their stability, the proposed law sets a $10 billion limit on stablecoin issuance by certain institutions and bans algorithmic stablecoins, which lack physical reserves.

The bill states that stablecoin issuers must keep complete reserves of dollar-backed assets to ensure they can be exchanged reliably for US dollars, protecting consumers.

This measure prevents the risks of not having enough reserves, which can destabilize the financial system.

Regulation of stablecoins will be enforced by state and federal agencies, including the Federal Reserve for certain financial institutions.

The bill requires these issuaries to publicly share details of their reserves, boosting transparency and trust.

Senators Lummis and Gillibrand, experienced in digital asset regulation, believe this bill has a good chance of success, particularly if combined with other critical legislative measures.

This move marks a significant step toward creating a safer and more transparent framework for digital currencies.

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