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Global rating agency Standard & Poor's Global Ratings has stated that a new bill focusing on stablecoins submitted to the US Senate may "encourage" US banks to enter the stablecoin market.
In a research report on April 23, Standard & Poor's outlined that the proposal outlined in the "Stablecoin Payments Act," submitted to the Senate on April 17, might encourage banks to participate in issuing stablecoins pegged to the US dollar and could cause trouble for large non-US entities issuing stablecoins like Tether.
The rating agency described stablecoins as a potential "critical pillar of financial markets" and viewed BlackRock's recent launch of the BUIDL Fund as evidence of stablecoins' "efficiency and enhanced settlement security" in asset and digital bond tokenization.
It's worth noting that the proposed "Lummis-Gillibrand Stablecoin Payments Act" suggests introducing a $10 billion issuance cap for non-bank stablecoin issuers, prohibiting unsupported algorithmic stablecoins, and requiring stablecoin issuers to hold one-to-one cash or cash-equivalent reserves.
The report stated, "Assuming the bill is approved and relevant banking regulations are implemented, the new rules could limit non-bank entities without bank charters to an issuance cap of up to $10 billion, thereby providing banks with a competitive advantage."
The rating agency also pointed out that issuing $10 billion in bonds to non-bank companies could cause trouble for Tether, which has a market capitalization of $110 billion and is currently the largest issuer of US dollar-pegged stablecoins on the market.
Tether is the largest stablecoin in circulation, issued by non-US entities, and therefore not a payment stablecoin allowed by the proposed bill, meaning US entities would not be able to hold or transact Tether, potentially reducing demand while boosting stablecoins issued by the US.
Standard & Poor's noted that most of Tether's trading activity occurs outside the US and is largely driven by trading in emerging markets, retail activities, and remittances.
Democratic Senator Kirsten Gillibrand introduced the bill last week, stating that a stablecoin regulatory framework is "absolutely crucial for maintaining the dominance of the dollar, promoting responsible innovation, protecting consumers, and combating money laundering and illegal finance."
However, not everyone is satisfied with the proposals outlined in the bill.
The cryptocurrency advocacy organization Coin Center expressed concern about the bill, stating that banning algorithmic stablecoins would be "bad policy" and describing it as unconstitutional under the protection of the First Amendment. |
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Post time 1-5-2024 20:51:35