Coin Center has raised concerns about the constitutionality of a proposed stablecoin bill put forth by Senators Cynthia Lummis and Kirsten Gillibrand. The bill includes a ban on algorithmic payment stablecoins, which Coin Center believes could stifle innovation and infringe upon First Amendment rights.
In a recent blog post, the non-profit crypto advocacy organization based in Washington, D.C., criticized the bill for its restrictive measures targeting algorithmic models. Coin Center argues that banning these models could impede progress in the crypto industry and goes as far as to suggest that such a ban would not only be bad policy but also unconstitutional.
The bill, developed in collaboration with the Federal Reserve and the New York State Department of Financial Services, aims to establish a regulatory framework for stablecoins. While the bill has been commended for bringing clarity to the stablecoin market, it has also faced backlash for its limitations on specific models.
Under the proposed legislation, stablecoin issuers would be required to maintain reserves of cash or cash equivalents at a 1:1 ratio to back their tokens. Additionally, the bill prohibits the issuance of unbacked algorithmic stablecoins, stipulating that only dollar-backed stablecoins can be issued by U.S.-approved issuers, effectively blocking algorithmic stablecoins from entering the market.
Coin Center’s response to the bill reflects a broader debate within the crypto community about the balance between regulatory oversight and technological innovation. As the bill moves forward, it will be important to consider the potential implications for the industry as a whole.