Pat Toomey, the top Republican on the Senate Banking Committee, said cryptocurrency stablecoin issuers should be able to choose from three different regulatory models including operating under a bank charter.
The Pennsylvania Republican outline
d a blueprint for future legislation in remarks at a hearing Tuesday, where he also said stablecoin issuers may be able to register as a money transmitter, which would subject them to state rules. Congress and federal agencies have been grappling with how best to regulate the crypto industry, including stablecoins, where the value of tokens is pegged to another asset, such as the dollar, as a way to reduce volatility.
It’s unlikely any legislation proposed by Republicans will gain much traction anytime soon with the Senate evenly divided. While some Democrats have highlighted risks crypto poses, Republicans often tout the benefits of the new technologies.
In his “guiding principles,” Toomey said stablecoin issuers would choose to either operate under a conventional bank charter, acquire a special-purpose banking charter designed in the future stablecoin legislation, or register as a money transmitter at the state level and a money services business at the federal level. He also said non-interest bearing stablecoins shouldn’t necessarily be regulated like securities.
“The legislation should address consumer protection and financial system risks, but it should also be designed to promote innovation in the rapidly evolving global digital economy,” Toomey said in a statement.
Last month, the President’s Working Group on Financial Markets published a report raising concern about risks tokens pose to the U.S. economy. The report urges Congress to pass legislation that requires stablecoin issuers to become banks with insured deposits, capital and liquidity requirements and Federal Reserve supervision. In fact, companies should be prohibited from offering payment stablecoins unless they are insured depository institutions, the report recommended.
— By Allyson Versprille (Bloomberg Mercury)