Stablecoin Bill: A Threat to Free Speech?

Coin Center, a cryptocurrency advocacy organization based in the United States, has raised concerns about a new bill in the Senate that aims to establish regulations for payment stablecoins. The organization claims that the bill, known as the Lummis-Gillibrand Payment Stablecoin Act, would be “bad policy” and unconstitutional due to its proposed ban on algorithmic stablecoins. Coin Center argues that this ban would infringe on the First Amendment’s protection of code. While they support the idea of regulating stablecoins, they believe an outright ban on a particular business model is unnecessary and stifles innovation.

Jerry Brito, the Executive Director of Coin Center, commended the effort to establish a regulatory framework for stablecoins in the U.S. He acknowledges that it is a challenging task. The proposed bill states that only approved issuers in the U.S. would be permitted to issue dollar-backed stablecoins. Lawmakers in both the House of Representatives and the Senate are working towards finding legislative solutions for stablecoins. Coin Center suggests that the Clarity for Payment Stablecoins Act, another bill in the House, takes a more reasonable approach by proposing a two-year moratorium on algorithmic stablecoins instead of an outright ban.

The depegging of TerraUSD (UST) from the U.S. dollar was a significant event that contributed to a downturn in the cryptocurrency market in 2022. This led to several firms filing for bankruptcy, and the U.S. authorities continued their efforts to pursue both criminal and civil charges against individuals involved in illicit activities. Senator Sherrod Brown, the chair of the Senate Banking Committee, expressed his intention to prioritize a stablecoin bill in the legislative session, provided his concerns are addressed. There are currently no plans in the House to schedule a floor vote for the Clarity for Payment Stablecoins Act.