Coin Center says Senate-presented stablecoin bill poses risks to innovation and free speech

Coin Center says the recently proposed stablecoin bill from Senators Cynthia Lummis and Kirsten Gillibrand may be “unconstitutional” due to its ban on algorithmic payment stablecoins.

Coin Center, a non-profit advocating crypto organization, said in a recent blog statement that the recently proposed stablecoin bill aimed at regulation in reality “stifles innovation and breaches First Amendment rights by banning all algorithmic models.”

In the statement, the Washington-based crypto think tank highlighted concerns over the potential impact of the proposed legislation on technological innovation and freedom of expression, saying the blanket ban on algorithmic models could hinder progress in the crypto industry, noting that “doing so would be not just bad policy but unconstitutional as well.”

“Banning people from publishing code and algorithms is a clear prior restraint on protected speech and is unconstitutional unless the government can show a compelling interest and narrow tailoring.”

Coin Center

Coin Center’s statement comes in response to the introduction of a bill by Senators Cynthia Lummis and Kirsten Gillibrand, which seeks to establish a regulatory framework for stablecoins. While the bill had received praise for its efforts to bring clarity to the stablecoin market, although it had also faced criticism for its restrictive measures targeting specific models.

The bill was developed jointly with the Federal Reserve and the New York State Department of Financial Services. According to its details, stablecoin issuers must have reserves of cash or cash equivalents at a 1:1 ratio to back their tokens. Additionally, the bill introduces a ban on unbacked algorithmic stablecoins, saying U.S.-approved issuers “may only issue dollar-backed stablecoins, preventing algorithmic stablecoins from entering the market.”