American credit ratings firm S&P Global said that a change in rules under the Lummis-Gillibrand Payment Stablecoin Act could see U.S. stablecoin adoption soar as the regulatory framework could bolster confidence.
In a research note Andrew O’Neill, managing director and co-chair of S&P Global’s Digital Assets Research Lab said the act promises a legislative and regulatory framework to bolster confidence in stablecoins, accelerate institutional usage, facilitate bank issuance, and simplify the provision of digital custody services.
The Lummis-Gillibrand Payment Stablecoin Act was introduced on April 17. O’Neill, explains in his note that regulatory clarity should encourage banks into the stablecoin market.
“Assuming the bill is approved, and that relevant banking regulation follows, the new rules may offer banks a competitive advantage by limiting institutions without a banking license to a maximum issuance of $10 billion. The bill is unlikely to significantly affect stablecoins already regulated by the New York Department of Financial Services (NYDFS), including PayPal USD, Gemini USD, and Paxos USD, as they are well-below the $10 billion threshold and because it is otherwise broadly consistent with NYDFS guidance,” said Andrew O’Neill, managing director and co-chair of S&P Global’s Digital Assets Research Lab.
Another important note from O’Neill is that Tether’s (USDT) dominance in the stablecoin market may wane. Tether is the largest stablecoin by outstanding volume, is issued by a non-U.S. entity and is therefore not a permitted payment stablecoin under the proposed bill, explains the S&P managing director.
“This means that U.S. entities couldn’t hold or transact in Tether, which may reduce demand while boosting
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