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Will the U.S. ban algorithmic stablecoins?

A new crypto bill is being discussed in the U.S. Senate that would ban algorithmic stablecoins.

By Finst News
• 2 min read
Will the U.S. ban algorithmic stablecoins?

A new crypto bill is currently being discussed in the U.S. Senate that would ban algorithmic stablecoins. This would span a two-year period, according to Bloomberg. The ban would affect stablecoins pegged to other cryptocurrencies to maintain dollar parity.

The creation and issuance of such stablecoins would be illegal under the initial draft of this new law. The two-year period is meant to give regulators the time needed to assess algorithmic stablecoins for their functionality and risks.

The best-known example of algorithmic stablecoins was Terra's UST. The token, linked to the LUNA token, went into a death spiral and collapsed spectacularly in May. This death spiral carved out the bottom of the bear market and has led regulators to keep a closer eye on the sector.

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