Coin Center has raised concerns about the recently proposed stablecoin bill put forward by Senators Cynthia Lummis and Kirsten Gillibrand, suggesting that it could be unconstitutional due to its ban on algorithmic payment stablecoins.

The non-profit organization, Coin Center, which advocates for crypto, expressed its views in a recent blog post, stating that the proposed bill, aimed at regulating stablecoins, could impede innovation and violate First Amendment rights by prohibiting all algorithmic models.

The Washington-based crypto think tank emphasized the potential negative impact of the legislation on technological advancement and freedom of expression, arguing that banning algorithmic models could hinder progress in the crypto industry and be considered unconstitutional.

“Banning people from publishing code and algorithms is a clear prior restraint on protected speech and is unconstitutional unless the government can show a compelling interest and narrow tailoring,” Coin Center stated.

Coin Center’s statement was prompted by the introduction of a bill by Senators Cynthia Lummis and Kirsten Gillibrand, which aims to create a regulatory framework for stablecoins. While the bill has been praised for bringing clarity to the stablecoin market, it has also faced criticism for its restrictions on specific models.

The bill, developed in collaboration with the Federal Reserve and the New York State Department of Financial Services, requires stablecoin issuers to maintain reserves of cash or cash equivalents at a 1:1 ratio to support their tokens. Additionally, the bill prohibits unbacked algorithmic stablecoins, stating that U.S.-approved issuers can only issue dollar-backed stablecoins, thereby preventing algorithmic stablecoins from entering the market.

US Senators have also urged the SEC for clarity following a misleading tweet on Bitcoin ETFs.

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