Three Republican lawmakers said the Fed’s steps to strengthen control over crypto and stablecoin bonds are undermining progress towards regulating stablecoins.
In a letter to Fed Chairman Jerome Powell on Monday, Republican lawmakers said the central bank was “effectively” preventing banks from issuing payment stablecoins. Patrick T. McHenry, RN.C., Chairman of the House Financial Services Committee, Representative Bill Huizenga, R-Mich. and Representative French Hill, R-Ark. they signed this letter.
Statement from Republican lawmakers on stablecoin regulations
Lawmakers noted that the Fed’s move to strengthen control over crypto and stablecoin bonds has hampered Congress’ efforts to regulate stablecoins. The letter also stated that such steps could deter financial institutions from joining the digital asset ecosystem.
The Federal Reserve issued a letter earlier this month requiring regulated state banks to have certain controls when they want to participate in stablecoin operations and to receive “written notification from the Federal Reserve that there are no supervisory objections” before moving forward. It also launched the “New Operations Supervision Program” SR 23-7 to increase oversight over crypto and distributed ledger technologies and “technology-driven partnerships with non-bank entities to provide financial services.”
Lawmakers also raised questions in the letter about whether the Fed is considering consulting with state banking regulators, especially when these steps allow certain payments stablecoin activities by the state banking regulator.
A copy of the letter, which is requested to be replied to the Fed by September 29, is curious about what stance the central bank will take on this issue. This letter follows the House Financial Services Committee’s work to develop a regulatory framework for stablecoins. However, these efforts were hampered by bipartisan negotiations in July.
Lawmakers stated that they believed a regulatory framework would protect consumers and provide certainty to market participants; however, they said the Fed’s oversight steps on crypto and stablecoin bonds contradicted the published letters, rather than cooperating with Congress.
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