United States Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) today introduced the Lummis-Gillibrand Payment Stablecoin Act.

The bill will require stablecoin issuers to hold one-to-one cash or cash-equivalent reserves to back their token. It prohibits unbacked algorithmic stablecoins and asserts that neither issuer nor users can use stablecoins for illicit or unauthorized purposes such as money laundering, according to an official release shared with The Block.

“Passing a regulatory framework for stablecoins is absolutely critical to maintaining the U.S. dollar’s dominance, promoting responsible innovation, protecting consumers and cracking down on money laundering and illicit finance,” said Sen. Gillibrand in a statement.

In all, the bill strives to create a framework …