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Home » Algorithmic stablecoins to be banned by Lummis-Gillibrand bill: Law Decoded
Algorithmic stablecoins to be banned by Lummis-Gillibrand bill: Law Decoded
Algorithmic stablecoins to be banned by Lummis-Gillibrand bill: Law Decoded
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Algorithmic stablecoins to be banned by Lummis-Gillibrand bill: Law Decoded

04/22/20243 Mins Read
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Legislation for Payment Stablecoins Introduced by U.S. Senators

Kirsten Gillibrand and Cynthia Lummis, both United States Senators, have put forth a new bill that aims to establish a regulatory framework for payment stablecoins. The legislation seeks to prohibit “unbacked, algorithmic stablecoins,” potentially referring to TerraUSD’s detachment from the U.S. dollar in 2022. Furthermore, it requires stablecoin issuers to maintain one-to-one reserves. The bill also looks to create federal and state regulatory systems for stablecoin issuers while preserving the dual banking system.

The 179-page bill outlines that non-depository trust companies in states would be allowed to issue payment stablecoins up to $10 billion, and authorized institutions would be permitted to issue stablecoins “up to any amount” under a limited-purpose state charter. The legislation also includes provisions to uphold the existing state and federal charters and establish rules on custody for non-depository trust companies.

However, advocacy group Coin Center has expressed concerns about the bill, arguing that it would be “bad policy” and potentially unconstitutional due to its proposed ban on algorithmic stablecoins. The group asserts that prohibiting algorithmic stablecoins targets code, which could violate the First Amendment’s protections. Coin Center suggests that the Clarity for Payment Stablecoins Act, set for a full floor vote in the U.S. House of Representatives, takes a more reasonable approach by proposing a two-year moratorium instead of an outright ban.

Canada Adopts International Crypto Tax Reporting Standard

By 2026, Canada plans to implement the international Crypto-Asset Reporting Framework (CARF) for taxation purposes. The country is getting a head start on the new standard, which is expected to be adopted by 47 countries by 2027.

Under CARF, crypto asset service providers (CASPs), including cryptocurrency exchanges, brokers, dealers, and automated teller machine operators, will face new reporting requirements. These requirements will encompass transactions between crypto assets and fiat, as well as transactions between different crypto assets. CASPs, whether individuals or business entities, will be obliged to report these transactions to the Canada Revenue Agency. Additionally, CASPs will need to report crypto asset transfers, including payment processing exceeding $50,000.

Arkansas Considers Restrictions on Crypto Mining

The Arkansas Senate committee has passed two bills that could potentially limit cryptocurrency mining within the state. These bills serve as a foundation for further discussions on the matter.

During an April 17 Senate hearing, lawmakers addressed various concerns, including noise reduction, foreign ownership, and the proximity of crypto mines to residential areas. The committee will continue to discuss the issue and gather public comments. The discussion about regulating crypto mines at the state level emerged from the Arkansas Data Centers Act, which restricted local governments from regulating crypto mines.

Binance Makes a Comeback in India and Obtains Dubai License

Following a four-month ban, Binance, a crypto exchange, is set to resume operations in India after paying a $2 million fine for noncompliance. It will be the second overseas exchange, after KuCoin, to re-enter the Indian market following the financial regulatory body’s blocking of access to crypto exchanges due to noncompliance.

Before its ban in January, Binance reportedly accounted for over 90% of Indian crypto trading volume. Additionally, Binance has obtained its Dubai Virtual Asset Service Provider (VASP) license after its co-founder, Changpeng Zhao, relinquished his voting power in the exchange’s local entity. The Virtual Assets Regulatory Authority required Zhao to give up his voting power in Binance FZE, the Dubai-based unit of the exchange, in order to grant the VASP license. While Binance’s current CEO, Richard Teng, confirmed the license acquisition, he stated that speculation regarding Zhao giving up his voting power was unfounded.

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