Breaking: US Senators Unveil New Bill Banning Algorithmic Stablecoins

Senators Cynthia Lummis and Kirsten Gillibrand propose a bill to regulate stablecoins, mandating one-to-one reserves and prohibiting algorithmic stablecoins.
By Coingape Staff
Updated July 22, 2025

Highlights

  • Senators Lummis and Gillibrand introduce bipartisan bill to regulate stablecoins.
  • Proposed legislation mandates one-to-one reserves and prohibits algorithmic stablecoins.
  • Stakeholder perspectives vary, with discussions ongoing in Congress regarding the bill's implications.

Senators Cynthia Lummis and Kirsten Gillibrand have introduced a significant legislative proposal aimed at regulating stablecoins. Their bipartisan effort underscores the growing urgency within the House and Senate to address the regulatory framework surrounding digital currencies. With stablecoins increasingly gaining traction in the financial landscape, Lummis and Gillibrand seek to strike a balance between protecting consumers and fostering innovation.

This initiative reflects a broader trend of policymakers grappling with the implications of digital assets on traditional financial systems. The proposed bill represents a concerted effort to ensure that stablecoin issuers operate within established guidelines, thereby safeguarding the stability of the US dollar and mitigating potential risks to consumers.

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Key Provisions of the Bill

Central to the proposed legislation are several key provisions aimed at addressing the regulatory gaps currently surrounding stablecoins. Foremost among these provisions is the requirement for stablecoin issuers to maintain one-to-one reserves, thereby ensuring that the value of stablecoins remains fully backed by assets held in reserve. Additionally, the bill prohibits the use of algorithmic stablecoins, which have raised concerns about their susceptibility to manipulation and volatility.

Moreover, the legislation mandates strict adherence to US anti-money laundering and sanctions rules, reflecting a commitment to combating illicit activities within the digital currency space. Crucially, the drafting process has been informed by technical assistance from regulatory bodies and agencies, ensuring that the bill is grounded in a comprehensive understanding of the regulatory landscape.

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Arguments and Stakeholder Perspectives

Supporters of the bill contend that its enactment is essential for maintaining the dominance of the US dollar in the global financial system. By establishing clear guidelines for stablecoins issuers, the legislation seeks to instill confidence in the stability and integrity of digital transactions.

However, the proposed bill has not been without its detractors. Banking Chairman Sherrod Brown has expressed reservations about certain aspects of the legislation and has suggested the possibility of tying it to broader legislative initiatives. Additionally, concerns have been raised by Senator Elizabeth Warren and others regarding the need to ensure that the bill adequately addresses risks to the financial system and protects consumers.

Also Read: Upbit To Suspend Deposit and Withdrawal of Crypto Exceeding 1 Million Won

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Coingape Staff
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