Dan Meuser Urges Congress To 'Enact A Federal Framework For Issuing Stable Coins'

15 hours ago

During a House Financial Services Committee hearing prior to the Congressional recess, Rep. Dan Meuser (R-PA) questioned witnesses about stable coins, and US digital asset regulation.

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00:00The gentleman from Pennsylvania, Mr. Muser, is now recognized for five minutes.

00:03Thank you, Chairman. Thank you to you all very much for being here. It's a very worthwhile

00:09hearing and really important. Stablecoins, when properly regulated, can provide faster,

00:15more efficient payment options and help keep the U.S. dollar at the forefront of global financial

00:19systems. They can accomplish these goals without the privacy and free market concerns associated

00:24with a central bank digital currency. WIPEMR, as we know, has introduced the Anti-CBDC Surveillance

00:31Data Act that protects Americans' privacy by preventing the direct issuance of a CBDC,

00:36which I did co-sponsor. As well, states have taken different approaches to regulating digital

00:41assets. This patchwork, however, has gotten the stablecoin ecosystem to where it is today,

00:45but if we want to see the benefits of payment stablecoins nationally, Congress needs to act.

00:51We need to enact a federal framework for stablecoin issuance. So, Ms. Butler,

01:00BNY is one of the oldest and largest custodians in the world. Can you describe how custody in

01:05the traditional financial system differs from custody in the payment stablecoin ecosystem?

01:11Thank you very much, Congressman, for your question. It doesn't differ because the custody

01:16that we provide for the reserve assets of a stablecoin, for example, taking cash deposits

01:22and then taking non-cash securities into our custody, applying asset safety and segregation

01:27rules, is the exact same that we would do for the traditional custody that we provide.

01:33Great. BNY Mellon, of course, holds reserve assets for major stablecoin issuers like

01:38Circle. How did BNY Mellon and Circle decide to form this partnership, and what custody standards

01:44were agreed upon to ensure that Circle's reserves were securely held? So, again, our custody

01:50standards were the same long-standing standards that we have for all custody that we provide

01:55globally around the world. In terms of deciding to take on the custody reserves for Circle,

02:03we followed our practices of business and risk framework. We looked at the client,

02:09their legal permissibility, their regulatory coverage. We looked at the activities that

02:14they were performing, and were those activities legal and permitted? And we looked at the assets

02:19themselves, and in this case, given the assets are very traditional assets, so again, cash and

02:23cash equivalents that fit right into the standard custody that we provide. Great. So, clearly,

02:29you believe it is important for banks and non-banks to have the same custody rules for

02:32stablecoin reserves? We do, yes. Okay, great. Thank you very much. Mr. Cascarilla,

02:38many argue, some anyway, a U.S. less than majority, shall I say. The CBDC could strengthen

02:46the dollar globally, but they, of course, raise concerns about privacy and free market competition.

02:52How does a payment stablecoin approach these concerns differently? I think the important

03:00point with the payment stablecoin issued by private issuers is that you're creating the

03:04innovation to respond to the market in a very timely manner, and we're still at a very early

03:08stage of the market where there's a lot of innovation that is still needed. I think that

03:12there have been some examples of attempt for CBDCs to be issued by other countries, and they've been

03:17perceived as surveillance coins and have not been widely adopted as of yet, and I think that could

03:23potentially be a limitation to the U.S. being able to successfully issue a CBDC. Can payment

03:29stablecoin strike a better balance between preserving individual privacy rights and

03:33maintaining the dollar status as a leading global currency? I agree with that. You agree we could

03:40find a better balance? I think that the right balance is to make sure that the private sector

03:45is leading and being able to create the innovation and being able to make sure that it's responding

03:50to the market as fast as possible, and I think that's going to be done from the private sector.

03:54Do you think the protections are then enough within the Stable Act and 521 for that matter?

04:00I do think that they are fit for purpose. I think that they have the right BSA AML rules as

04:06well as the right reserving requirements and the right international reciprocity can be put into

04:12place to make sure that the U.S. is setting the standards that everyone follows. Okay, thank you.

04:17Mr. Guinn, in states like Pennsylvania, for instance, digital asset regulation is limited

04:22money transmitted licensing. State regulators often want federal guidance on emerging technologies,

04:27but also prefer to maintain their own authority. How does the federal floor concept in the Stable

04:32Act ensure consistent national standards for stable coins while still respecting each state's

04:37ability to regulate according to local needs? Yeah, so I would say that the states have more

04:43flexibility in the dual banking system to have alternative regulatory frameworks. There are

04:49federal minimum standards in the banking, but they only cover a small part of the activity.

04:54Here, it's pretty comprehensive. I think it would be very difficult for a state to do much other than

04:59increase standards if they wanted to do so. Okay, great. Thanks very much, Mr. Chairman. I yield back.

Dan Meuser Urges Congress To 'Enact A Federal Framework For Issuing Stable Coins'

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