Algorithmic Stablecoins Face Ban: Law Decoded

United States Senators Kirsten Gillibrand and Cynthia Lummis have put forth a new bill that aims to establish regulations for payment stablecoins. The legislation seeks to prohibit algorithmic stablecoins like TerraUSD (UST), which detached itself from the U.S. dollar in 2022, and requires stablecoin issuers to maintain a reserve of one-to-one backing. It also aims to create regulatory frameworks at both the federal and state levels for stablecoin issuers while preserving the existing dual banking system. Under the proposed bill, non-depository trust companies in states would be allowed to issue up to $10 billion in payment stablecoins, while authorized institutions could issue stablecoins without limitations through a limited-purpose state charter. The bill also seeks to provide rules on custody for non-depository trust companies. Advocacy group Coin Center has raised concerns about the bill, arguing that it could be considered “bad policy” and potentially unconstitutional due to its ban on algorithmic stablecoins. Coin Center suggests that an alternative bill called the Clarity for Payment Stablecoins Act, which proposes a two-year moratorium on algorithmic stablecoins instead of an outright ban, takes a more reasonable approach.

Canada is preparing to adopt the international Crypto-Asset Reporting Framework (CARF) for taxation by 2026, ahead of its anticipated observance by 47 countries by 2027. The CARF would impose new reporting requirements on crypto asset service providers (CASPs), including cryptocurrency exchanges, brokers, dealers, and automated teller machine operators. CASPs, whether individuals or businesses, would be obligated to report transactions involving crypto assets and fiat, as well as transactions between different crypto assets, to the Canada Revenue Agency. CASPs would need to report crypto asset transfers, including payment processing, when the value exceeds $50,000.

In Arkansas, two bills have been passed by a Senate committee that could potentially restrict cryptocurrency mining in the state. The bills serve as a foundation for further discussions and seek to address concerns such as noise reduction, foreign ownership, and the proximity of crypto mines to residential areas. The committee will continue to deliberate on the issue and gather public input. The discussion surrounding crypto mining regulations at the state level arose from the Arkansas Data Centers Act, which limited the local government’s authority to regulate crypto mines.

Binance, a popular crypto exchange, is set to make a comeback in India after a four-month ban. The exchange has paid a $2 million fine for noncompliance to regain access to the country. Binance was the leading platform for crypto trading in India, accounting for over 90% of the trading volume before the ban was imposed in January. Binance has obtained its Dubai Virtual Asset Service Provider (VASP) license after its co-founder, Changpeng Zhao, relinquished his voting power in the Dubai-based entity of the exchange. The final requirement for the VASP license was for Zhao to give up his voting power, according to unnamed sources familiar with the matter. Binance’s current CEO, Richard Teng, confirmed the license acquisition but dismissed the speculation about Zhao’s voting power as pure speculation. Binance is the second overseas exchange, after KuCoin, to make a return to the Indian market.