Stablecoins Need To Be Backed By Cash: Senator Cynthia Lummis

According to pro-crypto Senator Cynthia Lummis, stablecoins need to be backed by cash and possibly issued by banks, sharing the concerns and opinions with the SEC Chair Gary Gensler. In today’s crypto news, we are reading more about her propositions and solutions.

The Republican Senator and crypto supporter Cynthia Lummis, showed a lot of caution around stablecoins as she recently said all stablecoins need to be backed by cash and regularly audited. The senator voiced her opinion in a speech on the Senate floor and the speech was all about her views on CBDCs and stablecoins in advance of the Federal Reserve’s report on the matter. Lummis acknowledged that stablecoins enable fast payments between people and businesses than the dollars as she said that they promote financial inclusion and new market opportunities but she also said that they present novel risks to the economy as they need trusted backing.

Stablecoins have to be 100% backed by cash and cash equivalents and this has to be audited regularly as she said:

“I am concerned that some stablecoins are not always fully backed by appropriate assets in a transparent manner.”

Lummis also said the stablecoins have to comply with anti-money laundering and sanctions law and she proposed that cryptocurrencies have to be issued by depository institutions or money market funds. Stablecoins have taken the forefront as the primary regulatory concerns in the US as senator Warren Davidson admitted that stablecoins could meed the definition of security. Stablecoins don’t promise holders a profit they do deliver maintenance of a specific value which represents the need for thorough auditing of the company reserves.
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Regulations were quite skeptical about Tether in the past which is the leading stablecoin on the market right now. The company repeatedly release audits of the reserves to confirm sufficient backing but the audits often lacked information that was specific to instill confidence in the regulators and the crypto community so they have failed to produce an independent third-party report. Gary Gensler who is the chairman of the Securities and Exchange Commission still advocates for stablecoin regulation and he referred to them as “poker chips at the casino gaming tables.”

As recently reported, Bitcoin proponent and senator Cynthia Lummis banned US athletes to use the digital yuan during their time at the Olympics. Along with Senators Marsha Blackburn and Roger Wicker, they sent an open letter to the chair of the US Olympic and Paralympic Committee requesting that it “forbid American athletes from receiving or using digital yuan before the Beijing Olympics.”