In a statement for the record shared ahead of a House Financial Services subcommittee hearing on stablecoins today, the American Bankers Association agreed with a recent report from the President’s Working Group on Financial Markets that action is “urgently needed” to address gaps in regulation of the stablecoin market. The association told the subcommittee that Congress should follow the recommendation from the report to enact legislation to ensure that stablecoin arrangements are subject to a “consistent and comprehensive federal prudential regulatory framework.”
The lack of regulation for nonbanks is particularly concerning, ABA said, adding that many nonbank stablecoins are designed to circumvent established regulatory architecture and “pose a number of unmitigated risks including harm to consumers,” the potential for stablecoin runs, and payment system risks which could spill over into the broader financial system.
ABA said it is encouraging regulatory agencies to use their existing authorities to identify and address the risks of nonbank stablecoin arrangements. The association added that it believes that customers who choose to access digital asset markets, including stablecoins, will be best served when they can do so through fully regulated banks where they are afforded robust consumer protection.