The advocacy group Coin Center has opposed the revised bill on payment stablecoins, describing it as “unconstitutional.”
The legislation prohibits unsecured algorithmic “stablecoins” and introduces anti-money laundering measures. It requires issuing firms to maintain reserves of cash and equivalents at a one-to-one ratio to back the tokens.
If approved, the bill will empower federal and state authorities to regulate and enforce stablecoin laws.
Coin Center argues that the proposed framework could stifle the development of the US cryptocurrency industry.
“It might make sense to require issuers like Terra to register with the SEC and provide appropriate disclosures […], but an outright ban on a particular business model is unnecessary and anti-innovation. If someone can comply with securities laws, they should be able to bring a product to market,” the statement reads.
The organization stated that banning algorithmic stablecoins “effectively amounts to a ban on code,” which threatens the constitutional guarantees of free speech in the United States.
Coin Center suggested that Congress revert to a previous bill that proposed a two-year moratorium on issuing such assets instead of the current permanent ban. It did not apply to existing projects.
Earlier, another nonprofit, the Blockchain Association, proposed considering feedback from its staff when reviewing the stablecoin bill.
The following statement is attributed to @BlockchainAssn CEO @KMSmithDC following today’s release of the Lummis-Gillibrand Payment Stablecoin Act: pic.twitter.com/7raPu2la2s
— Blockchain Association (@BlockchainAssn) April 17, 2024
Back in October 2023, one of the document’s co-authors, Cynthia Lummis, and Representative French Hill sent a letter to the Department of Justice requesting a “thorough assessment of the extent to which Binance and Tether provide material support and resources for terrorism.”