Sen. Lummis: It’ll Pay to ‘Choose Circle Over Tether’ Under U.S. Stablecoin Proposal

Senator Cynthia Lummis (R-Wyo.) recently stated that Circle Internet Financial may hold an edge over Tether in complying with U.S. regulations based on proposed legislation.

A regular American consumer, who isn’t versed in the intricacies of various stablecoin issuers, would probably trust companies subject to US regulation, according to Sen. Lummis (in an interview with CoinDesk TV).

Lummis expressed her preference for Circle over Tether if she were in that position, making this statement during the introduction of their newest stablecoin legislation alongside Sen. Kirsten Gillibrand (D-N.Y.) this week.

Stablecoins are digital tokens that aim to maintain a consistent value, often linked to the US dollar, making them essential for crypto transactions and contracts. The Lummis-Gillibrand bill, currently under development, aims to initiate discussions about regulating stablecoin issuers, drawing similarities with traditional banking regulations.

“This is very much oriented towards a U.S.-regulated company, and so Tether, if it chooses to remain offshore … that’s a business choice for them,” Lummis said, and the company and token, (USDT), would presumably be picked up by other regulators and continue operating beyond the U.S. system. “We’re very focused on companies that are located and embedded in the U. S. economy.”

Despite her statement, established stablecoin leaders like Circle are anticipated to encounter significant regulatory obstacles. For instance, they would need to secure a license from a federal regulatory body to continue issuing their stablecoins (like USDC), as per the proposed legislation. Unfortunately, under this bill, Circle, in its present form, wouldn’t meet the criteria – it would have to register as a depository institution, which is a requirement for businesses handling over $10 billion in tokens at the federal or state level.

Circle hasn’t responded to requests seeking comment on the bill.

Lummis expressed her satisfaction with releasing the regulatory framework for crypto despite initial uncertainty, calling it robust and stable. It aims to alleviate concerns of lawmakers over the crypto market instability since 2022. She is open to incorporating modifications suggested by the House, White House, or industry.

Despite the uncertainty surrounding cryptocurrency regulation in this Congressional session, some influential senators have expressed positive sentiments about the possibility. Notably, Senate Banking Committee Chairman Sherrod Brown (D-Ohio) has indicated a readiness to discuss stablecoins, albeit alongside other banking matters on his agenda. Similarly, Senate Majority Leader Chuck Schumer (D-N.Y.) has also signaled his openness to the topic.

Recently, the heads of the House Financial Services Committee held talks with Schumer regarding crypto legislation. However, it’s uncertain how far these discussions have progressed. Representative Lummis announced on Thursday that she is yet to learn what will come out of these conversations between Reps. Patrick McHenry and Maxine Waters. Neither representative’s office responded to requests for comment concerning the Lummis-Gillibrand bill.

Experts in the industry have been carefully examining the new law since it came out, and some of them have expressed doubts about its possible consequences and conditions.

Nikhilesh De contributed reporting.