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House Financial Services Committee Focuses on PWG Stablecoin Report | Sheppard Mullin Richter & Hampton LLP

House Financial Services Committee Focuses on PWG Stablecoin Report | Sheppard Mullin Richter & Hampton LLP

On February 8, the Property Money Solutions Committee held a listening to titled, “Digital Property and the Potential of Finance: The President’s Working Team on Economical Markets” to contemplate legislative tips from the President’s Doing work Team (PWG) report on stablecoins (we formerly talked over the report in an previously Purchaser Finance & FinTech Blog article here).   

Nellie Liang, the Treasury Department’s Undersecretary for Domestic Finance, offered the report’s conclusions and emphasised the need to have for lawmakers to introduce a legal framework for stablecoins and other novel kinds of electronic assets.  “Current statutory and regulatory frameworks do not offer reliable and comprehensive standards for the pitfalls of stablecoins as a new kind of payment solution.”

Liang underscored that the authorized framework need to tackle the prudential pitfalls of stablecoins:  (i) the hazard of stablecoin runs (ii) payment technique risks and (iii) the risks because of to concentration of financial power.  Liang commented that much work remained to be performed regardless of the the banking agencies’ modern crypto dash and the SEC and CFTC’s evaluation of authorities more than digital exchanges.

Committee users expressed worries that restricting stablecoin issuance to banking companies could have a adverse impact on level of competition in the sector and on racial equity among its probable clients. Committee Chair Maxine Waters questioned whether or not technologies organizations must be authorized to problem stablecoins.  Citing to the Liang to the historic “separation of banking and commerce,”  Liang mentioned that, “[i]n this scenario, we imagine stablecoins, as a payment instrument, really should not be issued by a technological innovation agency.”

Placing it into Apply: This hearing should really be seen in light-weight of the new press to control the use and transmission of digital currencies (we earlier talked over this modern development in previously Client Finance & FinTech Website posts herein this article, and here).  Stablecoins, like other digital currencies, are a scorching subject matter between U.S. regulators in which corporations are dealing with unclear regulatory guidelines and confusion relevant to which company regulates what component of cryptocurrencies. The regulatory frameworks that implement to stablecoin issuers and support vendors are considered by several to be inconsistent, producing possibilities for regulatory arbitrage and uncertainty among stablecoin consumers.