'Strengthen The Dollar's Global Position': Gottheimer Calls For 'Clear US Framework' On Stable Coins

yesterday

During a House Financial Services Committee hearing prior to the Congressional recess, Rep. Josh Gottheimer (D-NJ) questioned witnesses about federal stable coin regulation.

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Transcript

00:00Now recognized for five minutes.

00:01Thank you, Mr. Chairman.

00:02Mr. Gwinn, if I can start with you.

00:06You've emphasized the importance of legislation in the stablecoin industry.

00:10I've been a supporter of the legislation, stablecoin legislation for a long time,

00:14introducing one of the original piece of legislation and being supportive

00:17of the Payment Stablecoins Act in this committee last year.

00:20Could you explain to us what your experience has been with the current status quo?

00:24What would happen if there was a further delay in congressional action?

00:31I think the problem is that we risk, until we bring stablecoins into the regulatory perimeter,

00:36we risk having stablecoins that are not structured appropriately the way this bill would do it,

00:41and for instance, your bill would have done it.

00:44And I think that the real benefit is having a regulatory structure that sets minimum that

00:51anyone who is identified as a licensed stablecoin issuer would be adhering to.

00:57Are there any specific oversight measures you think should be included in that comprehensive framework?

01:02Well, I think the framework now has, it allocates the oversight to either state regulators

01:09or one of the federal regulators with a federal framework that really is the anchor for it.

01:18There can be alternative state regulatory frameworks, but they have to satisfy the same standard.

01:23So I do think that there is a good anchor there, and there seems like there's just as much oversight

01:28in this framework as there is in the dual banking system.

01:31And would you support requirements for regular audits and transparent reserve reporting,

01:37which I believe help prevent banking failures like we saw in 23?

01:40Yeah, I think those are absolutely critical, not only for preventing that,

01:44but also just publicizing in some ways to the public who wants to use this

01:51as to which are the safe stablecoins and which aren't.

01:53They can look at the disclosure and make informed decisions.

01:59Mr. Cascarilla, as someone heavily involved in the international payment system,

02:02you're familiar with threats to the dollar's role as a global reserve currency.

02:06China is heavily promoting digital payment systems from Alipay and Tencent

02:10in countries that are involved in the Belt and Road Initiative.

02:13They're also, as you know, seeking to make Hong Kong into a major player in global crypto markets.

02:17How might a clear U.S. regulatory framework for stablecoins affect international adoption

02:21and strengthen the dollar's global position?

02:24Well, I think it will be a very significant boost because it will create a level of trust

02:30in the usage of stablecoins that right now still does not exist.

02:36And if you look around the traditional financial system and the desire to be able

02:39to use stablecoins, it's very significant.

02:41And until you have this regulatory clarity, traditional financial institutions,

02:44as well as more widespread consumer adoption, is just going to be limited.

02:48And that, of course, creates opportunity because other nations

02:52and other currencies can take advantage of that.

02:54Thank you so much.

02:55And Ms. Butler, you discussed BNY stablecoin activities out of its New York State Chartered Bank.

03:00State Chartered Banks play a critical role in New Jersey, where I'm from,

03:03and the economic opportunities that stablecoins offer are continuing to grow.

03:07Do you believe the proposed dual federal state structure in the stable bill is sufficient

03:10for both bank and non-bank stablecoin issuers?

03:14We support federal consistency, no matter what pathway you choose, whether it's state

03:20or federal, but we need to have federal standards applied consistently to all.

03:28If I can move quickly to Mr. Collison.

03:32One of my primary concerns is that without proper guardrails,

03:35more crypto companies will flee overseas to jurisdictions like Bermuda, the Bahamas,

03:39or France, who already have comprehensive regulatory systems in place.

03:43And I worry that giving them first mover advantage will allow them to potentially,

03:47will, or allowing potentially adversarial jurisdictions set the playing field

03:50on a global scale.

03:52What specific competitive advantages are other countries gaining in the digital asset space,

03:55and what does the U.S. need to do to maintain its financial leadership?

03:59Well, most importantly, I concur.

04:01I think that's a risk.

04:03And I think by far the most important thing that the U.S. can do and that Congress can do is

04:08to provide a clear and effective framework for stable coins here in the country.

04:12And I think in broad strokes, you know, that which is under discussion today does that.

04:19Thank you so much, and I yield back.

'Strengthen The Dollar's Global Position': Gottheimer Calls For 'Clear US Framework' On Stable Coins

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