Congressional Hearing on Stablecoins

After years of seeking attention from the U.S. Congress, pro-digital-assets witnesses at the latest hearing included a senior executive from the Bank of New York Mellon Corp. and a lawyer from Davis Polk & Wardwell.

As support for crypto legislation grows, representatives of traditional finance are advocating for stablecoin regulations. At the House Financial Services Committee hearing, lawyer Randy Guynn argued that the Stablecoin Transparency and Accountability for a Better Ledger Economy Act (STABLE Act) should impose similar protections on stablecoin issuers as on banks.

Guynn emphasized that if permitted stablecoin issuers maintain appropriate reserves, they could be as secure as insured bank deposits. Meanwhile, Caroline Butler, global head of digital assets for BNY Mellon, stated the need for clarity from the U.S. government to ensure trust in the ecosystem for custodian banks.

Butler mentioned her bank’s existing services for issuers such as Circle (USDC) and expressed a desire to engage with evolving mechanisms like stablecoins and blockchain technology.

Proponents of stablecoin regulation are increasingly from traditional finance sectors as the political influence of the crypto industry grows, bolstered by campaign contributions to congressional efforts. This shift was evident in a recent Senate vote reversing an IRS rule on crypto, with further House votes anticipated.

Despite calls from some Democrats for a return to prior stablecoin discussions, others, like Representative Sam Liccardo, noted a transition toward regulatory action. In the Senate, a related bill called the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) is undergoing revision for markup hearings.

Meanwhile, legislation prohibiting the creation of a U.S. Central Bank Digital Currency (CBDC) was discussed, as Republicans express concerns over potential surveillance implications. Previous attempts to advance a U.S. CBDC faltered, facing opposition and skepticism despite reassurances from Federal Reserve officials that there are no plans for it.