According to Bloomberg, plans are also in place to give banks and non-banks the ability to issue their own stablecoins.
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The U.S. is considering a two-year ban on algorithmic stablecoins, according to Bloomberg.
Proposed legislation aims to target digital assets like UST, which collapsed spectacularly earlier this year.
The law would make it illegal to create "endogenously collateralized stablecoins" whose value is solely based on a different digital asset by the same issuer.
Whereas many stablecoins in the market are backed by U.S. dollars held in reserve, UST's peg was directly tied to a sister altcoin called LUNA.
Both of these cryptocurrencies crashed back in May, causing investors to lose tens of billions of dollars.
An arrest warrant has been issued for Terra co-founder Do Kwon, but South Korean prosecutors allege that he's on the run.
It's difficult to know how such a law could be enforced — but there's little doubt that it could affect the listings of algorithmic stablecoins on major exchanges.
American investors would also likely be forbidden from interacting with algorithmic stablecoins that were launched overseas.
According to Bloomberg, plans are also in place to give banks and non-banks the ability to issue their own stablecoins.
While its report says the bill could be voted on next week, no precise date has been decided — and time is running out before the midterm elections.
