The Lummis-Gillibrand Payment Stablecoin Act, introduced by US Senators Kirsten Gillibrand and Cynthia Lummis, aims to establish a legal framework for payment stablecoins. The act, announced on April 17, had been under development for several months and was intended to be presented in 2024.

The law prohibits the use of "unbacked, algorithmic stablecoins," requires issuers to maintain one-to-one reserves, and sets up regulatory systems at both state and federal levels. Additionally, it addresses the illegal activities involving stablecoins.

Senator Gillibrand emphasized the importance of having regulations in place for stablecoins to uphold the dominance of the US dollar, encourage responsible innovation, safeguard consumers, and combat financial crimes. Collaboration with federal and state agencies was crucial in drafting the legislation, with hopes of gaining support in the Senate and the House.

The bill, spanning 179 pages, allows approved institutions to issue stablecoins under a limited-purpose state charter without restrictions on the amount, while non-depository trust entities can issue payment stablecoins up to $10 billion. It also imposes custody regulations on non-depository trust companies and aims to maintain the current state and federal charter system.

Senator Lummis previously urged the Justice Department to investigate Tether, a stablecoin issuer, over allegations of supporting Hamas. Her concerns arose following Hamas' actions in Israel.

This legislative step is among the latest efforts to regulate the cryptocurrency industry and foster compliance with existing laws to ensure transparency and security.

Highlighted Crypto News Today: - Shiba Inu Investors Show Strong Holding, with 75% Holding for Over a Year