A House bill that would regulate stablecoins is flawed because it doesn’t apply the same level of federal oversight to state-licensed stablecoin issuers as is currently applied to state-chartered banks, the American Bankers Association and 50 state bankers associations said today. The draft legislation by House Financial Services Committee Chairman Patrick McHenry (R-N.C.) would allow state banking regulators to approve and supervise stablecoin issuers. In a joint letter, the associations said such a model is inefficient to provide the strong regulatory oversight needed for effective consumer protection and financial stability. (ABA also joined two national associations last week in a separate letter expressing concerns about the bill.)
“While some have advocated for this role for state regulators by comparing it to the dual-banking system, the proposed state path for payment stablecoin issuers is not comparable to that of state-chartered banks,” the groups said. “Rather, the proposed oversight model is more like state-based money transmitter licenses, a model that is insufficient to mitigate the risks to financial stability and consumer protection posed by stablecoins.”
Federal oversight applied in an equivalent manner as that for state-chartered banks “would include state-licensed stablecoin issuers having a primary federal regulator that evaluates and approves or rejects license applications, establishes and enforces compliance with rules to ensure financial stability and consumer protection, and participates in ongoing supervision,” the associations said.