Coin Center Criticizes Proposed Stablecoin Payment Law, Citing Overly Restrictive Measures
Coin Center has voiced significant concerns regarding the proposed stablecoin payment law, considering it excessively restrictive and a threat to innovation in the cryptocurrency industry in the United States.
The legislation mandates support for stablecoins exclusively with cash or its equivalent, potentially prohibiting algorithmic stablecoins. Coin Center argues that the proposed law violates freedom of expression rights by equating the ban on algorithmic stablecoins with the prohibition of publishing code instructions.
The nonprofit organization Coin Center, renowned for its involvement in cryptocurrency issues, expresses grave concerns about the proposed Stablecoin Payment Act put forth by Senators Lummis and Gillibrand. Supported by Senators Cynthia Lummis and Kirsten Gillibrand, the legislation would categorize cryptocurrency assets as stable, given their pricing in US dollars and 100% cash backing. Consequently, this regulation would empower the banning of algorithmic stablecoins operating on mathematical algorithms rather than physical assets, thus avoiding stability preservation.
Coin Center views the proposed law, primarily focusing on strict regulation of stablecoins, as overly constrictive, creating an uncomfortable climate for innovation in the cryptocurrency industry in the United States. During this discourse, the group shed light on the possibilities of algorithmic stablecoins being highly incompatible with this new financial technology, adding that stablecoins cannot be separated from the unprecedented transformation in financial technology. Contrary to this, the specific reserve nature of stablecoin systems can stifle the development of new and more innovative stablecoins.
The proposed Stablecoin Law faces issues related to freedom of expression:
Likewise, in a statement issued by Coin Center on Friday, constitutional arguments were raised against the formulation of the proposed law. The Association condemned the ban, describing it as an “unreasonable” and “unconstitutional” restriction, making it tantamount to obstructing law publication. Coin Center affirmed that this prior restraint on freedom of expression (as protected speech) challenges the freedom of expression rights guaranteed by the US Constitution.
They argue that requiring stablecoin issuers such as Terra to generally register with the Securities and Exchange Commission (SEC) and comply with the disclosure requirements proposed by the Securities and Exchange Commission (SEC) is reasonable. However, a complete ban on a specific business model or type of business is not.
Coin Center proposed that lawmakers seek an alternative that does not outright ban algorithmic stablecoins. They suggested a reevaluation of the Stablecoin Clarity Act, a previous legislative proposal that suggested a two-year delay instead of a ban, effectively allowing current projects to continue while temporarily halting new projects.
Cryptocurrency advocates seek to strike a balance in stablecoin regulation:
The Blockchain Association (BA), another staunch supporter of Blockchain, has also joined the trajectory to be pursued in the regulatory framework of stablecoins. In a statement released on Wednesday, Alexandria Library CEO, Kristin Smith, said the Association is ready to provide expert briefings and hold meetings with its staff and members of the Senate. Through this initiative, we not only embody the industry’s efforts to achieve this goal but also serve a broader purpose of the industry in ensuring that the new regulations do not undermine progressive technological advancements or fail to provide necessary financial assurances.
The proposals put forth by Coin Center and the active stance of the Blockchain Association to find a balance between the industry and regulators demonstrate the cryptocurrency industry’s goal of obtaining a stable future outlook. By collaborating with government representatives, these institutions are striving to improve the draft law and reach consensus on views regarding innovation as well as all potential risks associated with digital currencies. Their participation reaffirms the importance of dialogue and settlement in the legal adaptation phase to financial technology.
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