Ratings agency Standard & Poor's said the “Gillibrand-Lummis bill” introduced in the US Congress aims to create an enabling regulatory environment that will encourage “responsible innovation” by US companies and promising uses of stablecoins for fast cross-border transactions.

However, S&P experts say that the bill from Senators Kirsten Gillibrand and Cynthia Lummis on payment stablecoins could undermine Tether’s dominance in the local digital asset market.

The bill classifies only digital assets issued by American legal entities as “authorized stablecoins,” limiting the volume of stablecoin issuance for non-bank financial companies.

“Assuming the bill is approved and banking regulations begin, the new rules could offer U.S. banks a competitive advantage by limiting unlicensed companies to a maximum issuance of $10 billion,” Standard & Poor's said.

Tether's market dominance could be further weakened by the fact that the largest stablecoin issuer by volume is not actually a US entity. Consequently, USDT will not be included in the category of payment stablecoins permitted in the United States, and American companies will be prohibited from holding Tether assets on their balance sheets and making transactions with them.

According to Standard & Poor's, the protective measures of the “Gillibrand-Lummis bill” could significantly reduce demand for USDT within the United States and at the same time increase the popularity of stablecoins of American companies, for example, USDC, issued by the Circle consortium.

The stablecoin payments bill, introduced by Senators Kirsten Gillibrand and Cynthia Lummis, entered Congress on April 17.