US House Financial Services Committee on April 19, the United States House of Representatives Committee on Financial Services held a hearing on stablecoin regulation entitled
“Understanding Stablecoins’ Role in Payments and the Need for Legislation.”
Five experts were invited to testify at the hearing, with two of them releasing their scripts in advance.
Stablecoins are digital currencies that are pegged to a stable asset, such as the US dollar, and are designed to maintain a stable value. They have gained popularity as a means of payment and store of value in the cryptocurrency market.
Stablecoins Expand the Reach of the US Dollar
Austin Campbell, a managing partner at Zero Knowledge Consulting and an adjunct professor at Columbia Business School. Testified that stablecoins are “mundane” and look a lot like basic cash instruments. He also expressed his belief that stablecoins will expand the reach of the US dollar and increase financial inclusion if legislation does not derail their progress.
Campbell argued that the United States has a lot to lose from driving stablecoin issuers away. He cited Tether, an offshore stablecoin that provides little transparency or consumer protection, as the biggest winner of the US regulatory actions and legislative inaction over the past year
Stablecoins Are a Revolutionary Upgrade to Traditional Payment Systems
Jake Chervinsky, the chief policy officer at the Blockchain Association, called stablecoins “a revolutionary upgrade” to traditional payment systems. He also highlighted the importance of dollar-denominated stablecoins in this increasing financial inclusion. This could preserve the dollar’s role in the international economy.
Chervinsky argued that neither the Securities and Exchange Commission nor the Commodity. Futures Trading Commission currently has the regulatory authority necessary to regulate stablecoins. He said it is hard to construe stablecoins as securities and that the CFTC lacks the jurisdiction to oversee spot markets.
Stablecoin Legislation Should Follow Clear Delineation of Responsibility Between Agencies
Chervinsky suggested that legislation of stablecoin should eliminate competition between regulatory agencies. He proposed that stablecoins be overseen by a prudential regulator such as the Fed or the OCC at the federal level. He also called for stablecoins to be exempt from overlapping federal regulation by the SEC. Or the CFTC should provide regulatory clarity and clear delineation of responsibility between agencies.
Other Expert Testimonies
Adrienne A. Harris, the New York State Department of Financial Services Superintendent, Circle Chief Strategy Officer and Global Policy Head Dante Disparte, and Consumer Reports Director of Financial Fairness Delicia Reynolds Hand also testified at the hearing.
A. Harris discussed the importance of protecting consumers and ensuring the safety and soundness of the financial system in stablecoin regulation. Disparte emphasized the need for innovation in the financial sector and the potential benefits of stablecoins in facilitating cross-border payments. Reynolds Hand called for strong consumer protections and transparency in stablecoin regulation.
The hearing shed light on the need for clear and consistent regulation of stablecoins. This is to ensure a safe and secure integration into the financial system. While the experts had different opinions on the specifics of regulation. They all agreed on the importance of protecting consumers and promoting financial inclusion. As stablecoins continue to gain popularity, it is crucial for regulators to work towards a comprehensive regulatory framework that balances innovation and stability.