Stablecoin issuance is a monetary exercise comparable to what regulated banks do and should be supervised accordingly to ensure financial stability and consumer protection, the American Bankers Association said today in a statement to the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion. The subcommittee will meet this morning to debate two bills on stablecoin regulation, one brought by committee Chairman Patrick McHenry (R-N.C.) and the other by Ranking Member Maxine Waters (D-Calif.). The association said the bills as drafted fall short in several areas.
ABA noted there are elements in each bill that it supports, such as the fact that neither creates a category of nonbank entities eligible for Federal Reserve master accounts. However, in the chairman’s bill, financial stability is not included as a factor that regulators must consider when evaluating payment stablecoin issuer applications, and those regulators’ roles are significantly limited. Both bills have critical gaps in their proposed regulatory frameworks, including a lack of public disclosure for stablecoin issuers or requirements for third-party audits of payment stablecoin reserves.
“Stablecoin issuers behave in many instances like a bank in that they facilitate payments, connect to investment platforms and store value…. Applying the principle of ‘same activity, same risk, same regulation’ will help ensure that all customers are protected equally, regardless of where they engage with the financial marketplace and that the financial system remains strong, safe and competitive,” ABA said.