New Jersey Rep. Josh Gottheimer on Tuesday unveiled a first bill to place definitions around stablecoins, which critics say are susceptible to manipulation, bad actors and collapsing due to insufficient reserve capital.

A draft discussion released Monday by Gottheimer’s office proposes designating certain digital currencies as “qualified” stablecoins if they can be exchanged on a one-for-one basis for US dollars.

Qualifying stablecoins could be issued either by a federally backed bank or by a non-bank that pledges to hold at least 100% reserve assets consisting of US dollars, US debt, or any other asset that the Office of the Comptroller of the Currency deems appropriate cash collateral.

“I don’t think we should stifle innovation in the cryptocurrency market,” Gottheimer, a Democrat, said Monday afternoon.

Gottheimer’s legislation, which still seeks input from Capitol Hill and the crypto industry, will likely be the first of many attempts to structure the new bargain from Congress and the Biden administration.

Gottheimer said Nellie Liang, the undersecretary of the Treasury who is leading regulatory efforts, supported her plan when she appeared before the House Financial Services Committee last week.

“We have been very engaged with the Treasury and Blockchain Association and many companies in the space,” he added.

Stablecoins, issued by companies like Tether and Circle Internet Financial, have grown in popularity in recent years. Proponents say stablecoins link the ease and speed of more volatile cryptocurrencies to the stability of national currencies like the US dollar.

While many stablecoin issuers keep a pool of dollars to back up the value of the digital token, it’s not always clear if they can guarantee 100% of redemption requests for traditional fiat currencies. Some policymakers worry that a spike in redemption requests, or a stablecoin “run,” could bankrupt the issuer and trigger an insolvency domino.

“We commend the leadership of Representative Gottheimer, who has taken a thoughtful, risk-based approach to stable innovations in the United States and how they can fit into federal regulatory frameworks,” said Dante Disparte, Director of the Circle’s strategy, in an emailed statement. “Supporting banking and non-banking innovations in the payment system is key to long-term competitiveness and broad option for how dollars move in the 21st century.”

Gottheimer’s bill comes as Washington tries to define and regulate the crypto market.

In November, the Biden administration urged Congress to enact a litany of laws and work with other regulatory agencies to ensure that stablecoins do not pose systemic risk.

Specifically, the President’s Financial Markets Task Force has suggested restricting the issuance of stablecoins to banks insured by the Federal Deposit Insurance Corp. to ensure ongoing oversight, prudential standards and access to the government backstop if needed.

However, industry representatives balked at this recommendation and complained that some of the world’s most popular stablecoins are issued by companies that are not considered banks. Democrats and Republicans in the House and Senate are working hard to craft crypto laws in light of the task force report. Sen. Cynthia Lummis, R-Wyo., is expected to introduce a major crypto bill sometime this month.

Between competing bills, more pressing national priorities and precarious geopolitics, it could be months before lawmakers are able to muster enough support behind a bill to send it to President Joe’s desk. Biden for signing.