During the Senate Banking Committee hearing on stablecoins, a call for regulating the fiat-backed stablecoins was made, but what they will look like is to be seen.
“Let’s be clear about one thing: if you put your money in stablecoins, there’s no guarantee you’re going to get it back,” Senate Banking Committee Chairman Sherrod Brown said in his opening remarks, adding, “it’s gambling.”
On Tuesday, Massachusetts Democrat Elizabeth Warren Elizabeth Warren also shared her concerns around the volatility of stablecoin despite being pegged to a dollar. She then pointed to Tether reporting only having 10% of the assets backing USDT to be real dollars, numbers that aren’t verified by an audited financial statement or a government regulator.
It’s disappointing to see democrats continue to antagonize blockchains – the most liberating tool for financial inclusion in history.
Delegitimizing this industry is an injustice to everyone globally who would benefit from a more open, transparent and equitable financial system. https://t.co/FZbUfwBsoe
— Ryan Watkins (@RyanWatkins_) December 15, 2021
Meanwhile, Senators Pat Toomey talked about the stablecoins’ potential to lower the costs and increase the speed of payments. He said lawmakers should be careful not to stifle innovation with legislation.
Outlining a blueprint for future legislation, Toomey advocated for stablecoin issuers to have the ability to choose between three different regulatory models — operate under a conventional bank charter, acquire a special-purpose banking charter to be designed, or register as a money transmitter at the state level and a money services business at the federal level.
In his “guiding principles,” Toomey also said non-interest-bearing stablecoins shouldn’t be regulated like securities.
“The legislation should address consumer protection and financial system risks, but it should also be designed to promote innovation in the rapidly evolving global digital economy.”
This can’t be reiterated enough.
The attacks against crypto by some so-called progressive groups are so reductionist.
Read through their testimonies and you’ll find that they literally only have one motive: to hurt the industry any way they can. https://t.co/eEDascqSk8
— Zaheer (@SplitCapital) December 14, 2021
Just last month, the President’s Working Group on Financial Markets published a report in which it urged Congress to pass legislation that requires stablecoin issuers to become banks with insured deposits, capital and liquidity requirements, and Federal Reserve supervision.
The report urged Congress to limit the issuance of stablecoins to only insured depository institutions, meaning banks.