Highlights from Financial Service Committee hearing on stablecoins
The Digital Assets Financial Technology Inclusion Committee hearing Discuss stablecoin policy on May 18th.
At the outset of the meeting, Rep. French Hill said the purpose of the committee was to pass legislation in favor of stablecoins as an accepted payment method.
“We want stablecoins to be used as a payment mechanism, but currently they are not. is.”
Addressing the issue of anti-crypto sentiment at the government level, Hill said members of the committee have the power to reverse the U.S. crypto flight trend and “make the U.S. a leader in secure payments innovation.” stated.
“We look forward to hearing witness opinions on the two proposals, which will ultimately bring legal clarity and consumer protection to the stablecoin ecosystem.”
Finding Bipartisan Consensus on Stablecoin Regulation
Building on previous stablecoin hearings, September 2022the parties have submitted revised proposals that address key points, with the goal of finding consistency regarding the approval of appropriate stablecoin regulations.
Key concerns include the speculative nature of stablecoins, which are primarily used to trade against cryptocurrencies, their structural vulnerabilities to bank runs, the role of state and federal regulators, and non-bank companies. as a result of issuing stablecoins and how they will be issued. Disclosure and authentication work, the Fed’s role works, and it protects against threats to economic stability.
To address these concerns, Humanity Cash founders Fenny Wang, Matt Homer, Managing member of XYZ department and previous Executive Deputy Commissioner for Research and Innovation, New York Department Financial Services (NYDFS), David Portilla, Partner Davis Polk & Wardwell, Robert Morgan, CEO of the USDF Consortium, and Delicia Reynolds Hand, Director of Financial Integrity.
This was followed by questioning of witnesses from committee members to address the concerns raised.
Lynch said that if stablecoin regulation gave states the power to decide, they would be encouraged to ratify lax regulations to attract stablecoin issuers to their jurisdiction, resulting in said it would set off a downward spiral of deregulation among competing states.
It has been pointed out that Lynch was unaware of the difference between cryptocurrencies and stablecoins, which he proved when he asked Homer how many stablecoins have been registered and approved in New York State.
Lynch said the rate of five out of 20,000 stablecoins approved in New York is evidence of an impending “race to the bottom.” Mr. Homer did not correct the lawmaker.
Regarding the status of stablecoins and securities, Rep. Brian Still referred to a recent SEC Wells Notice filed against Paxos, in which securities regulators ruled out that the company had not registered the Binance USD stablecoin. claimed to have issued securities.
Steil asked Homer for his opinion on the matter, but he found it difficult to understand how stablecoin users expect profits, so the Howie test was misapplied in this case. I answered.
Discussing the Fed’s role in overseeing stablecoins, Rep. Maxine Waters suggested to Mrs. Hand that top-down legislation, with the federal level at the top, would ensure greater consumer protection.
Mrs. Hand agreed that the role of the top federal agency is key to consumer protection. She said the Fed could oversee stablecoins in the same way it manages chartered banks.
“The Fed needs to have a role to play in reviewing applications and rejecting them if they don’t meet certain criteria,” he said.