This week, at the House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion hearing on stablecoins, Chairman French Hill announced that the subcommittee would work to revitalize and update a stablecoin framework (finally).
The so-called ‘ugly child’ bill was prepared after last Congress Representative Hill, a former banker widely seen as an ally of the cryptocurrency industry, made it clear he wants to work on a bipartisan deal to provide issuer clarity, though the hearing ultimately showed that lawmakers still disagree on the details.
Will We See Bipartisan Support for Crypto?
Democrats widely expressed ongoing skepticism toward stablecoins, including concerns about financial stability, consumer protection, and the potential for illegal activities. Even though on almost all fronts, those claims have been squashed, time and time again.
Speaking of Demoncrats, Congressman Lynch also thinks the bill treats stablecoin issuers too much like traditional banks, allowing nonregulated entities to issue bank-like products and giving them access to Federal Reserve programs that are usually heavily regulated (reserved for regulated banks).
Congressman Lynch argues that the specificity of such programs for highly regulated entities is there for a good reason and added that the bill also needs to address conflicts of interest.
He also said that one of the benefits of crypto-company failures last year was that they were ring-fenced and did not infect other aspects of the economy and that legislation should protect it.
CA Congresswoman’s Thoughts on Stablecoin
Congresswoman Maxine Waters, Democrat of California, balked at the fact that the GOP-led committee was resurrecting a bill that she feels is obsolete given events—such as bank and crypto firm failures—because the idea of a stablecoin bill was first floated.
“The posted bill does not in any way recommend final work on the stablecoin,” she said.
“This does not represent any final bill of any kind. … We are starting from scratch dealing with stablecoins.”
In comparison, Congressman Bill Foster, Democrat of Illinois, is primarily concerned with the anonymity of the stablecoin industry, saying that bad actors can escape consequences without a standardized way to identify individual digital wallets.
“What we need is the equivalent of a license plate on every digital wallet. … It would be completely unacceptable to have unlicensed cars and unlicensed drivers driving in your neighborhood or across your international borders,” he said.
“It can be anonymous like a license plate is anonymous in most circumstances, but you must have the guarantee that when someone walks through your neighborhood and walks your dog, you can write down the license plate, Take it to a credible court system, anonymously on the owner of that car, or that wallet. And, drag them to court.”
However, not all Democrats were so skeptical of stablecoins. Congressman Richie Torres, Democrat of New York, said he supports a separate regulatory regime for securities and cryptocurrencies.
SEC Chairman Pushes for Regulation
This is contrary to what Securities and Exchange Commission Chairman Gary Gensler told the entire committee the previous day. Gensler stressed that most cryptocurrencies are securities and should be regulated by the SEC.
As if speaking directly to a special witness—New York State Department of Financial Services Adrienne A. Harris’ superintendent Torres said he would not vote for a stablecoin bill that circumvents the regulatory authority that New York already has.
What do we think? Is this in the best interest of the entire crypto community at large? Or is this the passing of yet another meaningless bill? Let’s hope for the best, shall we?
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