Lawmakers call for stablecoin regulation, criticize SEC’s enforcement approach

Congresswoman Maxine Waters, the main Democrat on the Home Monetary Companies Committee, referred to as for a bipartisan settlement on stablecoins by the top of 2024.

At a committee listening to on September 24, Waters expressed optimism {that a} legislative settlement could possibly be reached, emphasizing the necessity for strong federal rules and client protections as a part of the ultimate framework.

Waters stated:

“Mr. President, I need us to achieve a serious settlement on stablecoins and different long-awaited payments earlier than the top of this 12 months. Since 2022, we now have been working tirelessly in direction of an settlement and we now have each made concessions.”

Secure foreign money account

Waters and Republican Rep. Patrick McHenry, the committee chairman, have been working collectively since 2022 on a invoice to manage stablecoins, with the purpose of making a strong regulatory basis for the business.

The committee launched a model of the invoice in 2023, however has struggled to realize broader assist amid disputes over provisions that enable state regulators to approve stablecoins with out enter from the Federal Reserve, a measure Waters described as “very problematic’.

Waters emphasised the significance of steady currencies backed by protected reserves, corresponding to short-term authorities bonds, to make sure their stability. She additionally emphasised the necessity for the Fed to keep up an essential supervisory position, much like frameworks in different international locations.

McHenry expressed hope for progress on stablecoin laws whereas calling for broader regulatory readability round digital property. He stated he’s “optimistic” about stablecoin regulation and hopes it’ll result in “much-needed readability on digital property.”

With the top of the legislative session in sight, Congress should quickly approve essential payments. McHenry additionally famous that his separate crypto market construction invoice, often known as FIT21, might acquire momentum earlier than the 12 months is out.

Commissioners testify

The listening to additionally featured testimony from all 5 commissioners of the U.S. Securities and Alternate Fee, together with Chairman Gary Gensler and Commissioner Hester Peirce.

Lawmakers targeted their questions on the company’s dealing with of digital property and broader regulatory points, with Republicans criticizing the SEC’s “regulation by enforcement method” and questioning the regulator’s means to manage the business to offer readability concerning the rules.

Peirce agreed with lawmakers’ criticism of the company’s ambiguous method to digital asset regulation, stating that the SEC has the instruments to offer clear steering however has failed to take action.

She stated:

‘We now have [SEC] we now have taken a legally inaccurate place to masks the shortage of regulatory readability… We are able to present steering and select to not.”

Peirce additional emphasised that the SEC’s obscure place on token classification is inflicting confusion out there. She argued that the company ought to have made it clear that the tokens themselves usually are not securities, which might assist information secondary gross sales and platform listings.

Different commissioners echoed Peirce’s considerations, with Mark Uyeda noting that the SEC has a variety of instruments to handle regulatory gaps, together with defining requirements for token classification and crypto-related exchange-traded merchandise.

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