The recent announcement by United States Senators Kirsten Gillibrand and Cynthia Lummis introduced the Lummis-Gillibrand Payment Stablecoin Act, aimed at establishing regulatory measures for stablecoin issuers and their assets.

The bill emphasizes the prohibition of unbacked algorithmic stablecoins, focusing on the need for issuers to maintain one-to-one reserves to prevent incidents like the depegging of TerraUSD from the U.S. dollar. Gillibrand and Lummis stress the importance of state and federal oversight to combat illicit activities related to stablecoins.

Gillibrand highlighted the bill's significance in preserving the dominance of the U.S. dollar, fostering innovation, protecting consumers, and preventing money laundering. She expressed confidence in bipartisan support for the bill from both Senate and House members.

Key provisions of the bill include granting authority to state non-depository trust companies to issue payment stablecoins up to $10 billion and imposing strict custody rules for non-depository trust companies. Senator Lummis' previous advocacy against Tether demonstrates her dedication to maintaining the integrity of stablecoin operations.

The introduction of the Lummis-Gillibrand Payment Stablecoin Act reflects a growing concern among lawmakers and industry stakeholders regarding the necessity of robust regulatory frameworks for stablecoin issuers in the United States. Despite progress made by other similar legislation, further discussions regarding stablecoin regulation are crucial in the current U.S. legislative landscape.