In comments to lawmakers, the American Bankers Association today offered three principles to guide the establishment of a regulatory framework for payment stablecoins.
The House Financial Services Committee today held a hearing on creating a regulatory framework for stablecoins and the consequences of a U.S. central bank digital currency, or CBDC. In a statement to the committee, ABA said it supports several provisions in proposed legislation to create that framework, including language codifying the repeal of a Securities and Exchange Commission staff bulletin on how banks were expected to account for digital assets held in custody. ABA also reiterated its opposition to the creation of a U.S. central bank digital currency and its view that nonbanks engaged in the same activities as banks should be regulated the same.
ABA said it has identified three principles to guide a framework on payment stablecoins. The first is that regulations should avoid a negative economic impact. “It is imperative that the regulatory framework for payment stablecoin not interrupt the flywheel for credit creation by incentivizing value be held in the form of payment stablecoin rather than bank deposits, the association said.
The second is that regulation should control for known risks. In the case of illicit finance, that means the regulatory framework must apply the Bank Secrecy Act to all entities engaged in the transmission of value that substitutes for currency, such as payment stablecoins.
The third is that regulation should also be prepared for unknown risks. “With those unknowns in mind, the regulatory framework for payment stablecoin must not preemptively limit the ability of regulators to establish appropriate rules and supervise market participants,” ABA said.
