Stablecoin issuers are required to maintain reserves of cash or cash equivalents at a 1:1 ratio to back their tokens. The bill aims to prevent stablecoins from being used for illegal or unauthorized purposes, such as money laundering, and is intended to establish a clear and workable framework for stablecoins while also protecting consumers.
Senator Cynthia Lummis (R-Wyo.) emphasized the need to meet the growing demand for an evolving financial industry through well-crafted legislation.
The bill seeks to encourage responsible innovation by creating a framework that facilitates faster cross-border transactions, lower fees, and unlocks the potential of the digital asset industry. It was introduced in response to a previous bill presented in the spring of 2023, which proposed placing issuing companies under the jurisdiction of the Fed and implementing a temporary ban on algorithmic stablecoins.
Gillibrand’s bill is considered a reasonable compromise as it delegates oversight responsibilities to state regulators.