United States lawmakers discussed the role of stablecoins in a committee hearing, but some experts expressed concern about the country’s regulatory environment.
In an April 19 hearing of the U.S. Subcommittee on Digital Assets, Financial Technology and Inclusion, Austin Campbell, an adjunct assistant professor at the Columbia Business School, said areas including Singapore, Dubai, Abu Dhabi, and the United Kingdom have already proposed frameworks for stablecoins that could offer a competitive regulatory environment for issuers looking for a home.
“If you look around the world, you’re starting to see legislation that deals specifically with fiat-backed stablecoins,” said Campbell. “I think we can do better in America. Our financial regulation and systems are more robust […] If we don’t act, those are the best options and people will take advantage of them.”
In Campbell’s written testimony, he added:
“When I am asked to consult or advise for projects attempting to build stablecoins or use stablecoins, my first advice has now become to avoid US operations and a US domicile. The jobs are going elsewhere.”
“It’s time for Congress to act and pass legislation to establish a regulatory framework for payment stablecoins.”
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— Financial Services GOP (@FinancialCmte) April 19, 2023
Some lawmakers on the committee echoed similar concerns about legislation proposed to handle stablecoins in the United States. House Financial Services Committee chair Patrick McHenry released a discussion draft bill on how Congress could address stablecoins used for payments and a central bank digital currency.
However, ranking member Maxine Waters said “A lot of things have happened” affecting how the legislation could be drafted, saying the published draft was not representative of a compromise between the Democratic and Republican party members. Arkansas Representative French Hill, who chairs the digital assets subcommittee, referred to the previous compromise bill as an “ugly baby.”
“In addition to FTX and a lot of other things going on, this bill that we have posted in no way represents any final work because so much has happened in between,” said Waters. “We need to get back together in negotiations.”
Major stablecoins including Tether (USDT) and USD Coin (USDC) have previously temporarily de-pegged from the dollar in response to various market forces, including perceived contagion from the collapse of FTX and Alameda Research as well as Silicon Valley Bank. Drafts of bills proposed by some U.S. lawmakers have also suggested banning algorithmic stablecoins such as TerraUSD Classic (USTC), which lost its peg from the U.S. dollar in May 2022.