Congressmen propose exempting stablecoins and crypto-savings accounts from SEC oversight

A group of US congressmen has sent a letter to the SEC seeking relief from regulation of crypto-savings accounts and stablecoins.

The #crypto industry deserves regulatory clarity when it comes to yield products and #stablecoins. I’m glad to be joined by @RepTomEmmer, @RepTedBudd, @RepAGonzalez & @RepTrey in requesting this clarity from SEC so that innovation can thrive in the USA. pic.twitter.com/8uRR4CnDYC

— Warren Davidson (@WarrenDavidson) October 28, 2021

The document was signed by Warren Davidson, Tom Emmer, Ted Budd, Trey Hollingsworth and Anthony Gonzalez. The initiative aims to bring regulatory clarity and support innovation in the United States.

Lawmakers noted that both crypto-savings accounts and stablecoins can be offered by banks and trust companies. Similar products exist with money-transfer providers. In all these cases, the law sets minimum capital requirements and investment limits.

The sponsors questioned whether stablecoin issuers and crypto-savings-account providers require federal regulation.

They cited the 1982 Marine Bank v. Weaver and 1990 Reves v. Ernst & Young cases. Court rulings held that similar products of regulated institutions could not be treated as “securities,” while it is permissible for structures not subject to regulation.

By November 19 the SEC should answer the following questions:

• What type of regulation would remove the need to apply securities laws to the entities issuing stablecoins or offering crypto-savings accounts?
• Which aspects of this regulation (minimum capitalization, maximum permissible investments, among others) would be sufficient to protect investors in such cases?
• Which aspects of the existing regulatory framework are currently hindering this (if any)?

In August, Davidson, Emmer and Budd with colleagues introduced to Congress two bills that would require the CFTC to clarify the regulation of the digital-asset market.

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