A nonprofit crypto advocacy group says a stablecoin bill proposed by two U.S. senators earlier this week would violate the right to free speech.
In a new article, Coin Center says the bipartisan stablecoin bill – proposed by Republican Senator Cynthia Lummis of Wyoming and Democratic Senator Kirsten Gillibrand of New York – is unconstitutional because it would ban “algorithmic payment stablecoins” like Terra’s UST.
While Terra suffered a multi-billion dollar collapse in 2022, Coin Center states that algorithmic stablecoins “can be completely decentralized, without issuers or promoters making any promises.”
According to Coin Center, instead of banning them completely, the government should create algorithmic stablecoins and their issuers should register with the US Securities and Exchange Commission (SEC).
“The government failed to prevent the implosion of Terra not because there was a lack of legislation, but because there was a lack of enforcement of existing legislation. Therefore, it may make sense to require issuers of products like Terra to register with the SEC and make appropriate disclosures.”
Coin Center further notes that banning decentralized algorithmic stablecoins is no different than banning computer code, which is a violation of the First Amendment.
“In the United States, the creation and publication of software and algorithms, even commercial software for business and profit purposes, is protected by the First Amendment.
Banning people from publishing code and algorithms is a clear prior restriction of protected speech and is unconstitutional unless the government can demonstrate a compelling interest and limited customization. Given the availability of more reasonable approaches than an outright ban, the Lummis-Gillibrand approach is not specifically tailored.”
Lummis and Gillibrand first announced earlier this month that they would jointly introduce a regulatory stablecoin bill.
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