Negotiations between two senior congressional leaders to craft a regulatory stablecoin bill that could pass this year have hit another hurdle.
While it is widely accepted that the need for stablecoin regulation is even more urgent than for crypto as a whole, the two top members of the House Financial Services Committee were unable to agree on a bill that they negotiated.
See also: US Stablecoin Bill Hits Trouble as Negotiations Fail
The legislation looks unlikely to pass this year unless the movement picks up in the coming weeks. With a particularly divisive midterm election cycle about to kick into high gear, there will be little appetite for bipartisanship or complex legislation requiring compromises on both sides. Not to mention the fact that even if the committee and the entire House agree, a similar bill must be introduced and taken up by the Senate.
Read more: An introduction to US stablecoin regulations
This has bogged down on a number of issues, including the ability of state-chartered banks and other institutions to issue and oversee stablecoins, CoinDesk reported. While it is widely accepted that stablecoins should be 100% backed by dollars and high-liquidity investments like short-term treasury bills, the administration’s stance that only federally regulated banks and covered by the FDIC are authorized to do so has been pushed back from both sides of the aisle.
How these collateral reserves are treated – for example, can banks use them to make loans like other deposits – is another area of disagreement.
Then, it is likely that the bill calling for further study of a central bank digital currency (CBDC) – the digital dollar – has also raised issues.
The current and a former Comptroller of the Currency spoke out this week on crypto regulation.
Current office resident Michael Hsu pointed to the string of bankruptcies resulting from the $48 billion collapse of stablecoin Terra/LUNA, saying “the repercussions are still being felt in the crypto space today.”
Read more: How Stablecoin’s $48 Billion Collapse Affected Crypto
Speaking at The Clearing House + Bank Policy Institute annual conference on Wednesday September 7, Hsu said that “the federally regulated banking system, by contrast, was largely unaffected. I believe this is due, at least in part, to the careful and cautious approach we have taken and intend to maintain for the foreseeable future.
See here: OCC’s Hsu Says Banks Must Be Careful With Crypto As Economy Rises Risk
Speaking more broadly about the digitization of banking, Hsu said the impact of crypto has been overstated.
The changes “are happening thanks to the expansion of technology companies in financial services and, to a lesser extent, the hype and growth of the crypto industry,” he said. “While crypto has been in the headlines for most of the past year, I think FinTechs and big tech have a big impact and are much more deserving of our attention.”
Speaking on a panel at the same event on Tuesday, Sept. 6, Clinton-era Comptroller of the Currency Eugene Ludwig said crypto and fintech companies that compete with banks “s ‘get away with murder’, Bloomberg reported. Those companies that take deposits and make loans are not being monitored enough, Ludwig said, adding that they could cause the next recession.
Banks, he added, should be allowed to “play crypto markets more aggressively” in order to reclaim their territory, said Ludwig, who is currently a managing partner at Canapi Ventures.
California looks to New York
California is set to release a page on New York’s playbook with a bill that “would install the same type of onerous licensing and reporting regime that has stunted the growth of the crypto industry and limited access to secure and reliable cryptographic products and services”. in New York,” the Blockchain Association said, referring to the New York Department of Financial Services’ BitLicense.
See more : California’s crypto bill would be as tough as New York’s BitLicense, critics say
The bill’s author, Democrat Timothy Grayson, called it “smart and balanced policy,” adding that “a healthy cryptocurrency market can only exist if simple safeguards are in place.” .
The bill, which awaits the governor’s signature, would allow, among other things, stablecoins issued by federally or state-chartered banks and other trust companies.
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