A nonprofit crypto advocacy group says that a stablecoin bill proposed earlier this week by two US senators would violate free speech rights.
In a new article, Coin Center says that the bipartisan stablecoin bill – proposed by Republican Senator Cynthia Lummis of Wyoming and Democrat Senator Kirsten Gillibrand of New York – is unconstitutional as it would ban “algorithmic payment stablecoins” such as Terra’s UST.
While Terra suffered a multi-billion-dollar collapse in 2022, Coin Center argues that algorithmic stablecoins can be “fully decentralized, with no issuers or promoters making any promises.”
According to Coin Center, instead of outright banning them, the government should make algorithmic stablecoins and their issuers register with the U.S. Securities and Exchange Commission (SEC).
“The government failed to prevent Terra’s implosion not because there was a lack of legislation, but because there was a lack of enforcement of existing law. Therefore, it may make sense to require issuers of products like Terra to register with the SEC and make appropriate disclosures.”
Coin Center goes on to note that banning decentralized algorithmic stablecoins is no different than banning computer code, which is a violation of the First Amendment.
“In the United States, inventing and publishing software and algorithms, even commercial software for business purposes and for profit, is protected by the First Amendment.
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. Given the availability of more reasonable approaches than a full-on ban, the Lummis-Gillibrand approach is not narrowly tailored.”
Lummis and Gillibrand first announced they were going to introduce a regulatory stablecoin bill together earlier this month.
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