A well-known non-profit group that supports cryptocurrencies, Coin Center, has expressed reservations about a stablecoin bill that Senators Kirsten Gillibrand and Cynthia Lummis have introduced, arguing that it could compromise free expression and innovation. Coin Center claimed in a blog post that the legislation aimed at regulating stablecoins would violate constitutional rights because it forbids algorithmic payment stablecoins.
The Washington-based think tank for cryptocurrency highlighted the bill’s possible detrimental effects on freedom of speech and technical progression, claiming that outlawing any algorithmic models would violate the First Amendment and limit the development of the cryptocurrency sector.
Stablecoin Bill Raises Concerns
The statement from Coin Center comes after Senators Lummis and Gillibrand introduced a bill to create a stablecoin regulatory framework. The bill has drawn praise for its efforts to clarify the stablecoin market, but it has also drawn criticism for its onerous regulations that single out particular models.
The bill, which was created in cooperation with the Federal Reserve and the New York State Department of Financial Services, requires stablecoin issuers to keep cash or cash equivalent reserves in order to sustain their tokens at a 1:1 ratio. It also prohibits algorithmic stablecoins that are not supported, stating that only issuers authorized by the United States may create dollar-backed stablecoins. This effectively keeps algorithmic stablecoins out of the market.
