Biden administration recently released its long-awaited report on stablecoins, and a government official disagrees. Pat Toomey, a Republican senator and a senior member of the Senate Banking Committee, disagrees with treating stablecoin issuers like banks. Amid a booming cryptocurrency market and accusations against Tether, it adds fuel to the fire surrounding crypto regulations.
Toomey: Stablecoin issuers are not banks
Toomey shared his thoughts on the relationship in an interview with Yahoo Finance earlier today. Toomey acknowledged that Congress should act in the crypto space. After all, digital assets do not fit well into the existing legal framework, given their novelty.
However, the senator disagrees with the report beyond that point, regarding its details:
“It is not entirely obvious to me that the optimal outcome is to treat all stablecoin issuers as if they were banks, or to force them to become banks. I can see a topic for that, but I also see topics for treating stablecoin issuers very differently.
Pat Toomey. Source: Time
report, released last week by Gary Gensler, suggested that stablecoin issuers were insured by depository institutions. This is intended to help prevent “bank runs” at stablecoin institutions. Such fears are justified given the ongoing mystery surrounding Tether and whether the company actually has adequate reserves.
Toomey believes that there should be more time for public opinion and political debate on the proper treatment of stablecoins. Personally, he said he has not come to a firm conclusion about what it should look like. However, he sees the dangers of big banks gaining an unfair advantage under management’s recommended solution. It could also stifle innovation in the stablecoin space.
Senator Toomey: Helping the Crypto Industry
Ultimately, Toomey wants more careful consideration before taking reckless regulatory action for fear of “systemic risks” from stablecoins. head of the OCC, Michael Hsu, expressed his concern about this scenario.
“When I read the report, I have the feeling that it is a report issued by bankers or people who have a very bank-centric mindset, and I think we shouldn’t automatically go that way,” Toomey said.
senator has a history of listening to the crypto industry’s side, whenever the government makes things difficult for him. In September, he sent a letter to SEC Chairman Gary Gensler seeking direct answers to various regulatory questions.
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