Senator Cynthia Lummis Advocates for Stablecoin Regulation in Bitcoin Realm: Analyzing the Proposed Bill and its Ramifications

Last updated:
March 8, 2024 13:40 EST
| 2 min read

Source: Sen. Cynthia Lummis’ website

The stablecoin regulation bill by U.S. Senators Cynthia Lummis and Kirsten Gillibrand is set for an imminent announcement according to a March 7 report

As Axios reported, the bill is supported by positive feedback from stakeholders, including the Treasury and the New York Department of Financial Services, who have offered technical assistance to the Senate bill.

Addressing Risks and Scepticism

Lummis is widely regarded as a pro-Bitcoin lawmaker. The Senator has called for a deeper integration of the digital asset into the government’s daily workings. She’s also a HODLer who racked up a considerable amount of BTC in 2021.

Despite her Bitcoin support, however, the Senator has harbored reservations about stablecoins like Tether. She has led the call for the Department of Justice to consider filing criminal charges against Tether and Binance for their alleged connections to illicit financing.

This was made in the wake of the terrorist group Hamas’ attack on Israel. The Senator also does not support central bank digital currencies or CBDCs.

She’s taken a hard-core position on the state-controlled digital assets, tagging them as “anti-democratic” and “a means of financial censorship.”

1) The Fed cannot introduce a CBDC without congressional approval ✅

2) A CBDC is anti-democratic and a means of financial censorship 💯

3) Now onward to outlawing a CBDC in America 🇺🇸 https://t.co/K7Z7wJQGC5

— Cynthia Lummis 🦬 (@CynthiaMLummis) March 7, 2024

The chair of the Federal Reserve, Jerome Powell, has kept silent on whether or not the US will adopt a CBDC, but he has explained that the country is nowhere near creating one. At the hearing, he commented before the Senate Committee on Banking, Housing, and Urban Affairs.

Stablecoins, with a market value of around $150 billion, have often been viewed as potential threats to American anti-money laundering and counter-terrorism regulations.

Senators Lummis and Gillibrand’s proposed legislation is considered one of the pieces that will be more likely to pass Congress.

For months, they have been working on legislation that will provide regulatory clarity around stablecoins while safeguarding consumers against bad actors.

Discussions continue with the House Financial Services Committee as proposed legislation seeks to balance federal and state authorities. The introduction and referral are submitted directly to a Senate Committee for approval.

Stablecoin and CBDC Discussions Ongoing outside the US

Stablecoins have become an indispensable link between traditional finance and crypto assets.

These cryptocurrencies are designed to maintain a stable value that often returns to fiat currencies such as USD or EUR. The coin acts as a bridge to mitigate volatility among other crypto assets.

Asset backing is one of the key mechanisms enabling stablecoins, as every stablecoin is backed by assets at a 1:1 ratio.

This guarantees a stablecoin’s price stays constant while offering redemption of those underlying assets.

Due to this stability, stablecoins have become an attractive option for many applications.

As the US delays its decision on stablecoin regulation and CBDC launch, other countries have surged ahead.

In the UK, there’s a coordinated effort among the regulators to allow CBDCs and stablecoins to coexist.

The regulators are the HM Treasury, the Financial Conduct Authority, and the Bank of England (BoE).

Despite these coordinations, the BoE is still in an exploratory phase and has yet to decide when it plans to implement the CBDC.

Today, we respond to the digital pound consultation. We are grateful to those who contributed. With @HMTreasury work continues to explore a digital pound in the design phase, but no decision has been made to issue one.

You can read our response here: https://t.co/h4GsMkuOpd pic.twitter.com/IwN58h7rNf

— Bank of England (@bankofengland) January 25, 2024

Should they move forward with the digital pound, also known as Britcoin, the regulators expect to launch the CBDC no earlier than 2025.

Across the world, many countries are running a pilot CBDC program to study digital currency, including China’s e-yuan.

There’s a new push for wholesale CBDCs in Hong Kong, while the Philippines central bank expects the country’s wholesale CBDC pilot program to be completed by the end of the year.

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