US Senators Kirsten Gillibrand and Cynthia Lummis have introduced a bill aimed at regulating stablecoins in the United States. This 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 includes a provision that prohibits the use of unbacked algorithmic stablecoins. The senators behind the bill emphasize that both the issuer and the users of stablecoins should not engage in illegal activities such as money laundering.

Senator Cynthia Lummis stated, “To meet the growing demand in our financial industry, we need legislation that provides a clear framework for stablecoins while ensuring consumer protection.”

The bill aims to promote responsible innovation and facilitate faster cross-border transactions, lower fees, and foster growth in the digital asset industry.

Earlier this year, there were discussions about an alternative bill on stablecoins as a response to a previous bill introduced in 2023. The new bill, proposed by Gillibrand, emphasizes state regulators’ oversight responsibilities, offering a compromise solution.

Following the bill’s publication, Sherrod Brown, the head of the U.S. Senate Banking Committee, expressed readiness to support the bill’s passage under certain conditions.

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