Terra (luna) 
According to an S&P report, the bipartisan stablecoin bill could provide banks with an advantage over other institutions and stimulate competition in the digital asset custody industry. The Lummis-Gillibrand Payment Stablecoin Act proposed on April 17 aims to bring regulatory clarity to the $157 billion stablecoin market, currently dominated by Tether (USDT).
Stablecoins are cryptocurrencies pegged to fiat currencies, offering stability in a volatile financial market. They are typically tied to sovereign currencies like the U.S. dollar, such as Circle’s USD Coin (USDC), acting as gateways for liquidity. If approved, the bill would allow U.S. banks to issue fiat-pegged tokens without limitation, while requiring non-bank service providers to maintain a market cap below $10 billion.
Andrew O’Neil, Managing Director and Co-Chair of S&P Global’s Digital Assets Research Labs, believes that the regulatory framework will give banks a competitive edge and encourage blockchain adoption in the financial sector through asset tokenization and digital bond issuance. O’Neil highlighted the efficiency of on-chain payment rails, mentioning BlackRock’s Ethereum-based fund as an example.
While the Lummis-Gillibrand bill may not affect existing U.S.-based products like PayPal USD, it does not authorize offshore entities like Tether. This could impact USDT’s market presence, but most of Tether’s activities and volume occur outside the U.S. The regulations do not cover decentralized stablecoins like Maker’s DAI and Frax Finance’s FRAX, as policymakers tend to prefer centralized systems such as USDC due to their resemblance to traditional financial operations.
The S&P report also predicts an increase in new providers entering the digital asset custody industry, especially with the SEC updating rules that no longer require custodians to report crypto-assets on their balance sheets. This change could lead to more competition in the industry. For more insights, Andrew O’Neil and S&P Global’s Digital Assets Research Labs can provide further comments on the bill and its potential impacts.
