According to US Treasury Undersecretary for Domestic Finance Nellie Liang, technology companies that aren’t licensed as banks shouldn’t offer crypto stablecoins.
Liang told members of the House Financial Services Committee that companies that issue tokens to allow people to pay for goods and services should be subjected to the same level of scrutiny that lenders are subjected to under US regulations. Her remarks come after Meta Platforms Inc.’s Facebook abandoned plans for a stablecoin project last month, which drew strong opposition from the US government.
Concerns about stablecoins’ lack of regulation have grown since US regulators expressed reservations about Facebook’s plans to create a token that could have been used by billions of the company’s social-media users in 2019. On Tuesday, Liang stated that Congress must pass legislation focused on the environment “immediately.”
“This is an urgent issue given the rapid growth of this market,” In an interview before the hearing, Liang stated. She testified that the assets’ market value has risen to around $175 billion from around $5 billion at the start of 2020.
Stablecoins are digital currencies typically pegged to the US dollar or another fiat currency. Liang’s call for congressional action comes after a report released last year by the President’s Working Group on Financial Markets, which recommended that stablecoins be regulated similarly to banks.
According to Liang, the Treasury has been in contact with congressional offices, and many of them are working on proposals. In addition, Senator Pat Toomey of Pennsylvania, the chairman of the Senate Banking Committee and a leading Republican, has released a blueprint for future legislation. Still, it’s unclear whether Republicans and Democrats, like Toomey, will be able to find enough common ground to pass a bill anytime soon.
Maxine Waters, the committee’s chairwoman, said her panel would continue to investigate stablecoins and the potential risks to the US financial system and investors during Tuesday’s hearing. “Regulators and policymakers must work together to ensure that any innovation in this space is responsible–that it provides strong consumer and investor protection, reduces environmental impact, and prioritizes financial inclusion,” Waters said.
Meanwhile, the editor-in-chief of decrypt media expressed his opinion on the entire stablecoin legislation requirement.
He said, “the Biden administration would like to bring control of the stable coin market into the hands of the big banks that they trust or at least think are above board fda insured you heard it right there they are aware of the big growth of stable coins and it concerns them not all of them but many democrats.” He also said, “I think the hearing today confirms it is that the administration would like not to kill stable coins but bring them under government trust Seeing the stable coin market as their way in their door through which to kind of curve the whole crypto industry either rightly or wrongly.”
He also expressed his concern over how democrats have different opinions, and none of them are on the same page! For example, he said, “Brad Sherman who is the Congressman from California who’s a Democrat said that he sees crypto as a kind of subprime mortgages which doesn’t make much sense and said that it could be a threat to people of colour meanwhile Gregory meeks in New York also democrats said that he believes Kurt’s new operation said that evil these criticism opportunities for the unbanked and underbanked, so a lot of these lawmakers are not on the same page they just know that they’re concerned about stable coins.”