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TD Cowen said that the Lummis-Gillibrand Payment Stablecoin Act, introduced last week, would benefit the stablecoin issuers.
Lummis-Gillibrand Bill, introduced by Cynthia Lummis and Kirsten Gillibrand on April 17, aims to regulate the stablecoins. A few agencies and regulatory bodies favor the bill, whereas some oppose it because of the banning of algorithmic stablecoins. Advocacy Group Coin Center claimed the bill was a ‘bad policy’ whereas TD Cowen, an investment bank, came in support.
What Does Lummis-Gillibrand Bill Say?
Lummis-Gillibrand Bill, introduced on April 17, prohibits unbacked, algorithmic stablecoins. Additionally, issuers must hold one-to-one cash or cash-equivalent reserves to back the stablecoins.
The bill also ensures that neither the users nor individuals can use the stablecoins for illicit or unauthorized purposes, including money laundering. Maintaining the US dollar dominance, encouraging responsible innovation, and safeguarding consumers are some key goals of the Lummis-Gillibrand Bill.
TD Cowen, an investment bank, supported the bill, stating that it is a positive move for the stable coin issuers.
“Lummis-Gillibrand, in our view, would be positive for stable coin issuers as it would establish clear rules of the road. It also would be symbolically important for crypto in general as it would be the first productive crypto legislation from Congress,” said the research group of TD Cowen Washington.
The bill will offer the stablecoin issues to hold cash-equivalent reserves or one-to-one cash to back the stablecoins. Furthermore, the bill will ban the illegal or unauthorized use of the stablecoins.
“Lummis-Gillibrand bill will create clear rules of the road,” the bank added.
Additionally, the bill is supposed to give state and federal agencies positions in charting and enforcement. Also, the bill was created with the technical contributions of the Federal Reserve, the Treasury Department, and state financial regulators in Wyoming and New York. Furthermore, the bill will allow the non-depository trust companies to issue over $10 Billion in payment stablecoins.
Mergers between banks and stablecoin issuers can be possible with the respective bill and strengthen the financial system. Despite such benefits, the bill experiencing disappointments from the Advocacy group Coin Center.
Who’s In The Opposition?
According to Coin Center, the bill violates the First Amendment and harms constitutional rights by targeting the code. A complete ban on algorithmic payment stablecoin is potentially unconstitutional and may affect the entire crypto market.
Despite this, Coin Center supports the US House of Representatives proposal, which offers flexible registration for crypto to ensure growth and compliance with rules. House Financial Services Chair Patrick McHenry and ranking Democrat Maxine Waters, D-Calif., are working on the proposal.
Besides this, Canada will apply for the International Crypto-Asset Reporting Framework (CARF) for taxation by 2026. Also, the standard is anticipated to be supported by 47 countries by the end of 2027.
The CARF will handle the new reporting needs of crypto asset service providers (CASPs), including crypto asset brokers, exchanges, and dealers. Moreover, transactions between crypto assets and fiat and crypto assets will be reported to CASPs.
Additionally, payments exceeding $50,000 would also need to be reported.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
