US Senators Kirsten Gillibrand (Democrat from New York) and Cynthia Lummis (Republican from Wyoming) introduced a stablecoin bill on Wednesday. The bill would require stablecoin issuers to hold a one-to-one reserve of cash or cash equivalents to support their tokens. According to an official press release shared with The Block, it prohibits unsupported algorithmic stablecoins and claims that issuers and users cannot use stablecoins for illegal or unauthorized purposes such as money laundering. The statement said, "Maintaining the US's position through a stablecoin regulatory framework is absolutely critical. The dominant position of the US dollar promotes responsible innovation, protects consumers, and combats money laundering and illegal finance."

Senators Cynthia Lummis and Kirsten Gillibrand have proposed a new bill that aims to establish definitions for dollar-pegged digital assets and their issuers. The bill mandates that payment stablecoin issuers meet reserve and operational requirements, including creating subsidiaries specifically for issuing stablecoins. Additionally, stablecoin issuers must deal in dollar-backed tokens and ensure their tokens are fully backed by reserve assets. The proposed legislation seeks to define how stablecoins will operate in the US and would prohibit algorithmic stablecoins. There are ongoing discussions about attaching stablecoin legislation to a must-pass bill reauthorizing the Federal Aviation Administration, and Senator Sherrod Brown has indicated that specific safeguards must be included for the legislation to move forward.

Dante Disparte, Circle's global policy director and chief strategist, said in an interview that stablecoin regulations should be unified rather than fragmented. Disparte explained, "This is not to say that these countries have made mistakes or done anything wrong. The lack of action by the US policy is actually the reason for the gap, while other countries are legislating to fill this gap. So this is a trend we should expect: as more and more countries set up barriers and formulate rules that favor local advantages, the industry will become Balkanized." In addition, Paolo Ardoino, CEO of Tether, said in an interview that the company could claim that US legal agencies have no jurisdiction over it, but that would be foolish. He said that Tether actually voluntarily cooperates with US authorities such as the FBI and DOJ, as well as about 40 law enforcement agencies globally. "I think the Treasury Department should work with stablecoins in a proactive way," Ardoino said. "We have tools like Chainalysis to track anything that happens in the secondary market. By the way, there is no legal requirement for stablecoin issuers to be responsible for the secondary market. But I think we have a supervisory responsibility." (CoinDesk)

The U.K. government plans to introduce new legislation for stablecoins, as well as for crypto staking, exchange, and custody by June or July of this year. Economic Secretary Bim Afolami announced this at the Innovate Finance Global Summit on Monday, stating that the government aims to make the U.K. a global hub for crypto. The legislation will bring a range of crypto asset activities within the regulatory perimeter for the first time. The U.K. passed a financial markets bill in 2023, laying the foundation for regulated financial activities in the country, and the government has consulted with local regulators on its ambitions to regulate crypto.

Singapore-based stablecoin and yield company Zoth has raised $2.5m in funding led by Blockchain Founders Fund, with participation from several other investors. The company plans to use the funds to build a multichain stablecoin-powered #RWA ecosystem ahead of its upcoming public offering. Zoth aims to connect liquidity across Traditional Finance and Onchain Finance to accelerate the flow of trillions into sustainable RWAs, including Cross Border Trade Finance, Sovereign Government Bonds, and Corporate Credit. The company's inaugural offering, ZOTH-FI, is an Institutional Grade Fixed Income Marketplace that enables investor access to top-tier Fixed Income assets through Stable coins.

Lawmakers pushing for stablecoin legislation met with Senate Majority Leader Chuck Schumer. House Financial Services Committee Chairman Patrick McHenry and senior Democrat on the committee, Representative Maxine Waters, met with Schumer on Thursday to push for legislation and may tie it to the reauthorization of funding for the Federal Aviation Administration (FAA). In crypto activities, McHenry has repeatedly stated that his group's stablecoin bill still has a chance of passing and being signed into law by President Joe Biden, including in earlier remarks this week. McHenry, who is retiring from Congress this year, prioritizes legislation to provide protection for token issuers and to provide a more stable foundation for more volatile cryptocurrency transactions, among other purposes.

Stablecoin issuer First Digital Trust announced on Wednesday that it will expand its stablecoin FDUSD to the Sui blockchain, following its launch on Ethereum and BNB Chain. First Digital CEO Vincent Chok stated in an interview that this expansion is part of First Digital's efforts to increase the usage of FDUSD among DeFi users. FDUSD is issued in accordance with Hong Kong's digital asset regulations and is supported by US Treasury bills and bank deposits to maintain its price peg to the US dollar. It has become the fourth largest stablecoin after USDT, USDC, and DAI, with a market value of $3.3 billion since its launch last year.

The combined supply of the top three stablecoins - USDT, USDC, and DAI - has reached a new high of $141.42 billion, indicating continued capital inflows into the crypto market. Despite Bitcoin's recent decline in momentum, the rising supply of stablecoins provides reassurance to Bitcoin bulls as it suggests a potential for dip demand. Stablecoins have become the primary mechanism for purchasing cryptocurrencies and trading derivatives, with traders increasingly preferring stablecoin-margined futures. Other indicators, such as Bitcoin's MVRV Z-score, suggest that the path of least resistance for Bitcoin's market value is on the higher side.

Hong Kong legislator Wu Jiezhuang revealed that Hong Kong will release stablecoin consultation and sandbox (computer security mechanism), which will allow the industry to innovate digital asset projects in the sandbox environment. Relevant legislation will be reviewed in the Legislative Council at the end of this year or next year, which will help the entire digital asset industry ecosystem. Hong Kong has been improving the digital asset (virtual asset) market on different legal levels. Last year, there were regulations on virtual currency trading platforms and issuance systems.

Developer of Cardano ecosystem stablecoin USDM Mehen Finance announced that it will be launched to retail investors next month. Currently, the stablecoin is only available to institutional users. In addition, Mehen also plans to launch its first investment through equity crowdfunding instead of token sales. It is reported that the USDM model is similar to other fiat-backed stablecoins but has features that prevent over-minting. Its reserves are ensured through Charli3 oracle reports on the Cardano network, ensuring real-time transparent transfers. Although USDM cannot be frozen on-chain, Mehen stores its reserves in government currency market mutual funds managed by Fidelity and Western Asset Management. Mehen has obtained licenses in 17 US states and plans to apply for money transmission and virtual asset service provider licenses in Europe and the UK later this year.