US Congress Rejects PWG Proposals on Stablecoins

The U.S. House Financial Services Committee did not back the idea PWG of treating stablecoin issuers as insured depository institutions.

The PWG proposal, reflected in the report on risks related to stablecoins, would place their issuers on a level with banks. In addition to meeting capital and liquidity requirements, these institutions would be subject to federal oversight.

North Carolina Republican Patrick McHenry proposed regulating at the state level rather than a comprehensive federal stablecoins bill.

“How will they mitigate these alleged risks? They will turn them into banks […] and that is a completely opposite approach,” he said.

Committee members agreed with making collateral disclosures mandatory and with regular audits. Chair Maxine Waters urged that the reserve not be reduced to the minimum.

Lawmakers also focused on creating a level playing field for stablecoin issuers, prompted by the fact that big banks already operate as insured depository institutions.

According to The Block, the hearings showed that Democrats have become more receptive to the potential impact of cryptocurrencies on underserved communities, minority groups and cross-border transfers. The publication attributed this to growing lobbying by industry representatives and the possibility of accepting digital assets as campaign donations.

On February 15, similar hearings will be held in the Senate.

The Fed published a report, in which the threats and impact of stablecoins on monetary policy and the U.S. banking system were examined.

Earlier, OCC chief Michael Hsu allowed growth in trust in the stablecoins under proper oversight. The regulator promised in 2022 to publish additional recommendations on integrating cryptocurrencies into banks’ product lines.

In January 2022, the insured FDIC financial institutions USDF Consortium announced plans to promote a “regulated” stablecoin.

Subscribe to ForkLog news on Telegram: ForkLog Feed — all the news, ForkLog — the most important news, infographics and opinions