Banks are in and Tether could fade if latest stablecoin bill passes: S&P Global

According to rating agency S&P Global Ratings, banks may be interested in entering the stablecoin market if the latest stablecoin bill introduced in the Senate passes.

of Lumis Gillibrand Payment Stablecoin Act, introduced Last week, Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) rated the regulations as likely to clarify “should encourage banks to enter the stablecoin market.” the company announced. Note on wednesday. However, the proposed bill would not allow Tether, which could reduce demand for stablecoins based outside the US.

“Approval of the stablecoin bill will accelerate institutional blockchain innovation, particularly in tokenization and digital bond issuance with on-chain payments,” the rating agency said. “The increase in institutional use cases for stablecoins could create opportunities for banks as stablecoin issuers and also reduce Tether’s dominance in the global stablecoin market.”

If passed, the bill would require stablecoin issuers to hold 1:1 cash or cash equivalent reserves to back their tokens. It also prohibits algorithmic stablecoins, and states that issuers and users cannot use stablecoins for illegal or unauthorized purposes such as money laundering.

Banks are in, Tether is out.

According to S&P Global, the new bill, if passed, would limit the amount of issuance by companies without a banking license to a maximum of $10 billion, giving banks a competitive edge.

Tether’s dominance in the global stablecoin market could be blunted because it is issued by a non-U.S. company and would not be allowed if the bill passes, the rating agency added.

“This means that U.S. companies could not hold or trade Tether, potentially reducing demand while increasing the number of U.S.-issued stablecoins,” S&P Global said. It is driven by retail users and remittances. ”

Tether did not immediately respond to a request for comment. According to data from The Block Research team, USDT is the largest stablecoin, especially by market capitalization.

Sen. Sherrod Brown (D-Ohio) will be critical to passing the stablecoin bill. The Chairman of the Senate Banking Committee said: bloomberg Last week, he was open to pushing stablecoin legislation in conjunction with legislation and other measures that would allow banks to do business with marijuana businesses. The House of Representatives is also working on a stablecoin bill.

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