Congressional Hearing to Question Potential of Stablecoins


The U.S. Congress is set to host a hearing this week to analyze the possible effects of Stablecoins.

The House Financial Services Committee is scheduled to meet Wednesday (April 14th) to discuss the merits of such digital currency. The committee has also made public a proposed bill that, if passed, would impose a moratorium on endogenously collateralized stablecoins.

The text of the bill states: “During the two-year period beginning on the date of enactment of this Act, it shall be unlawful to issue, create, or originate a stablecoin not in existence on the date of enactment of this Act.” The moratorium would be in place until the government has completed a study of the impacts of a Federal Reserve-issued central bank digital currency (CBDC).

In an interview with PYMNTS’ Karen Webster last year, then-House Financial Services Committee Chairman Rep. Patrick McHenry (R-North Carolina) said he wanted to focus on stablecoins if Republicans regained the chamber. “What we now have is a complicated policy and it’s a complicated legislative text,” he said. “The nature of legislative compromise does not often create something of beauty. It creates something of practical consequence. And this is what I’m going for.”

McHenry noted that the country needs stablecoins such as USDT and USDC, which are more sound and less volatile than bitcoin and other cryptocurrencies. “But we don’t have a federal regulatory ‘form’ around it,” he said, “or insight into the assets acting as backing.”

The proposed moratorium follows on the heels of a bill introduced last year by former Sen. Pat Toomey (R-Pennsylvania) that sought to ban algorithmic stablecoins. Among the witnesses to appear at Wednesday’s hearing will be Dante Disparte, Chief Strategy Officer at Circle Internet Financial, which issues the USDC stablecoin; Austin Campbell, a professor at Columbia University Business School; Adrienne Harris, Superintendent of the New York State Department of Financial Services; and Jake Chervinsky, Policy Chief of the Blockchain Association.

Against this backdrop, PYMNTS recently asked whether the arrival of the new FedNow payments system would make cryptocurrencies and stablecoins obsolete. A White House paper on crypto currency answered this question, explaining that growth of crypto assets has revealed a need for a faster, more inclusive financial system with a real-time payment system and circulating digital money. The paper argued that the launch of FedNow will fulfill this need, minimizing the advantages of circulating digital money.

“As U.S.-based crypto firms increasingly look to establish operations abroad,” PYMNTS writes, “the future of the digital asset industry in America looks increasingly clouded.”

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