Pro-crypto organization Coin Center is opposing a new bill to regulate stablecoin use and operations. In a public statement released Friday, the U.S.-based advocacy group sharply criticized the Lummis-Gillibrand Payment Stablecoin Actcalling it “unconstitutional” and anti-innovation.
Latest Stablecoin Bill Is Bad Policy: Coin Center
On Wednesday, Senators Kirsten Gillibrand and Cynthia Lummis introduced an invoice on stablecoin payments. This bipartisan bill aims to protect the interests of investors as the popularity and adoption of stablecoins as a “comfortable” substitute for the US dollar has increased in recent years.
The Lummis-Gillibrand Payment Stablecoin Act includes many crucial provisions, including stablecoin operators’ strict compliance with existing U.S. anti-money laundering and sanctions regulations. Additionally, this bill also proposes the creation of a federal and state regulatory framework that maintains the transparent existence of the dual banking system.
Importantly, the bipartisan bill requires all stablecoin issuers to maintain individual reserves, thereby prohibiting the use of algorithmic stablecoins, i.e. stablecoins, that rely on a computer program to adjust their supply in response to changes in demand. This particular provision has sparked a lot of backlash from the digital asset community, with many viewing these laws as anti-crypto.
The Coin Center notably called this regulatory proposal bad policy. The cryptocurrency advocacy group said the ban on the use of algorithmic stablecoins can be interpreted as a ban on publishing code, which would be unconstitutional under the provisions of the First Amendment rights.
However, Coin Center also acknowledged concerns about algorithmic stablecoins following the crash of the Terra-Luna ecosystem in 2022. They propose that the US Senate require issuers of these tokens to register with the SEC rather than implement a total ban on algorithmic stablecoins which they consider “anti-innovation”.
The American pro-crypto group also highlights another solution in the “Stablecoin Payment Clarity Act“, introduced in 2021, which aims to force all newly launched algorithmic stablecoins to undergo a two-year moratorium. Although Coin Center does not agree with the proposed moratorium, they believe that such legislation remains reasonable because it does not propose a total ban or threaten the “free speech” of developers.
Stablecoin supply increases by 22% in 2024
Furthermore, the global stablecoin market continued to expand throughout 2024. According to data from DeFiLlama, the total market capitalization of stablecoins increased by 21.95%, from $139.342 billion on January 1, 2024 to its current value of $158.957 billion.
Among these values, USD attachment (USDT) expresses an outright dominance of 69.10%, with a market capitalization valued at $109.84 billion. The only other stablecoin with a sizable market share (20.90%) is USD Coin (USDC) with a market cap of $33.223 billion. Other notable stablecoins include Dai (DAI), First Digital USD (FUSD), and Athena USDe (USDe).
Total crypto market cap valued at $2.266 trillion on daily chart | Source: TOTAL chart on Tradingview.com
Featured image from Britannica, chart from Tradingview
