Lawmakers Appear Unlikely to Limit Stablecoin Issuance to Banks

Source: American Banker

Members of the House Financial Services Committee expressed bipartisan skepticism to a key recommendation by the Biden administration’s financial regulators, who have urged lawmakers to limit stablecoin issuance to federally insured banks and credit unions.

The committee convened in a virtual hearing Tuesday to discuss a report on the financial risks of stablecoins and other digital assets, issued by the President’s Working Group on Financial Markets in November. Nellie Liang, the Treasury Department’s undersecretary for domestic finance, joined the hearing to present the report's findings and emphasized the need for lawmakers to introduce some kind of legal framework for stablecoins and other novel types of digital assets.

But Republican lawmakers repeatedly panned the idea that stablecoins should spring only from insured depository institutions, and that concern appeared to be shared by some key Democrats. Rep. Tom Emmer, R-Minn., and one of the top advocates in the House for the crypto industry, criticized the working group's report, arguing that “banks should not be the only institutions in the ecosystem with dibs to issue the potential array of financial products that the President's Working Group report simply lumps together as a stablecoin.”

Emmer’s concerns were echoed by many other Republicans on the committee, including Ranking Member Patrick McHenry, R-N.C. But they were also joined by Rep. Gregory Meeks, D-N.Y., who said he was concerned that a legal framework limiting stablecoin issuance to banks could have a negative impact on competition in the sector and on racial equity among its potential customers. (American Banker, Feb. 8)