Pro-crypto organization Coin Center is pushing against a new legislative bill targeted at regulating stablecoin use and operations. In a public statement released on Friday, the US-based advocacy group heavily criticized the Lummis-Gillibrand Payment Stablecoin Act, describing it as “unconstitutional” and anti-innovation.

On Wednesday, senators Kirsten Gillibrand and Cynthia Lummis introduced a bill on stablecoin payments. This bipartisan proposed legislation aims to protect investors’ interest as the popularity and adoption of stablecoins as a “comfortable” substitute to the US dollar have risen over the past few years. 

The Lummis-Gillibrand Payment Stablecoin Act includes many crucial provisions, including strict compliance of stablecoin operators with existing US anti-money laundering and sanction regulations. Furthermore, this bill also proposes the creation of a federal and state regulatory framework that maintains the seamless existence of the dual banking system.

Importantly, the bipartisan bill requires all stablecoin issuers to maintain one-to-one reserves, effectively outlawing the use of algorithmic stablecoins, i.e., stablecoins, which depend on a computer program to adjust their supply in response to changes in demand. This particular provision has drawn many reactions from the digital asset community, with many viewing such laws as anti-crypto.

In particular, the Coin Center described this proposed regulation as a bad policy. The crypto advocacy group stated that prohibiting the use of algorithmic stablecoins can be interpreted as a ban on publishing code which would be unconstitutional in accordance with the provisions of the First Amendment Rights. 

However, Coin Center also acknowledged the concern over algorithmic stablecoins following the crash of the Terra-Luna ecosystem in 2022. They propose that the US Senate House mandates issuers of these tokens to register with the SEC rather than implementing a total ban on algorithmic stablecoins which they view as “anti-innovation.”

The US pro-crypto group also highlights another solution in the “Clarity for Payment Stablecoins Act,” introduced in 2021, which seeks to compel all newly launched algorithmic stablecoins to undergo a two-year moratorium. While Coin Center does not agree with the proposed moratorium, they believe such legislation is still reasonable as it does not propose a total ban or threaten the “free speech” of developers.

In other news, the global stablecoins market has continued to expand all through 2024. According to data from DeFiLlama, the total stablecoins market cap has gained by 21.95 % from $139.342 billion on January 1, 2024, to its current value of $158.957 billion.

Of these values, Tether USD (USDT) expresses an outright dominance of 69.10%, with its market cap valued at $109.84 billion. The only other stablecoin with a somewhat significant market share (20.90%) is the USD Coin (USDC) with a market cap of $33.223 billion. Other notable stablecoins include Dai (DAI), First Digital USD (FUSD), and Athena USDe (USDe).

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