Patrick McHenry implied that regulating stablecoins in the United States with a “single regulator at the federal level” would most likely fail.
At least two U.S. lawmakers debated whether regulations on stablecoins and digital assets should be addressed at the state or federal level during a hearing for the House Committee on Financial Services.
North Carolina Representative and ranking committee member Patrick McHenry asked the committee to consider state-level regulatory frameworks in lieu of a comprehensive federal law on stablecoins during a virtual hearing on Tuesday titled “Digital Assets and the Future of Finance: The President’s Working Group on Financial Markets’ Report on Stablecoins.” In response to McHenry, Jean Nellie Liang, Under Secretary for Domestic Finance at the United States Treasury Department, stated that there was no explicit federal law governing stablecoins and digital assets, but rather a regulatory framework that had been applied to “various aspects” of tokens such as consumer protection laws.
Liang added that officials consulted with state regulators during the development of a November report from the President’s Working Group on Financial Markets, or PWG, to recommend what level of federal oversight, if any, would be required for innovative technology like stablecoins. The group came to the conclusion that stablecoin issuers in the United States should be held to the same standards as insured depository institutions, such as state and federally chartered banks.
“According to the PWG report, a more consistent, less fragmented framework is preferred,” Liang said, adding that the group’s proposal could apply to a state-chartered or federal-chartered bank. “The state regulatory system is disjointed.” There is an issuer, and then there are the custodial wallet providers, which are the other parts of the arrangement that are governed by different rules. The entire arrangement is not subject to plenary oversight.”