The delay comes in the wake of a letter sent from the Independent Community Bankers of America to Rep. Maxine Waters, chairwoman of the committee on financial services, and Rep. Patrick McHenry, the ranking minority member of the committee, calling for a pause until the trade group and other stakeholders can further review the matter.
“Legislation is urgently needed to address the emerging systemic risk created by a proliferation of unregulated stablecoins,” reads the letter. “However, we believe that it would be premature to markup legislation of this scope and scale without the benefit of full review and comment from ICBA and other stakeholders. We encourage you to convene a hearing to more fully evaluate the significant consequences for the financial industry posed by the regulation of stablecoins.”
The proposed legislation is under intense scrutiny from lawmakers and regulators with input coming from both sides of the aisle, the U.S. Department of the Treasury and the executive as concerns surrounding the controversial cryptocurrencies continue to swirl.
“Although the Ranking Member, [Treasury] Secretary [Janet] Yellen and I have made considerable progress towards an agreement on the legislation, we are unfortunately not there yet, and will therefore continue our negotiations over the August recess,” Waters said. “It’s critical that we continue moving the ball forward on this so we can have a regulatory framework that protects consumers, while allowing for responsible innovation. I look forward to coming to an agreement in the near future and marking up bipartisan legislation when we return from recess.”
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Among some of the chief concerns from the Independent Community Bankers of America includes what it believes are structural inadequacies in the framework for the proposed legislation. One example cited by the organization is the ability under the draft law to allow non-banks to issue the coins. This, reads the letter, raises questions about how much oversight the Federal Reserve will truly have over non-bank issuers.
“For example, it is unclear whether the Federal Reserve would examine non-bank issuers or whether the Agency’s oversight would extend to the parent companies of these issuers among other unanswered questions around supervision,” it adds.
Additionally, the group raised questions pertaining to issuer capital, liquidity requirements and account access.
To address these questions, the letter calls for Congress to enact legislation that ensures comprehensive examination and oversight comparable to traditional financial products and services existing in the banking system.
It also calls for due diligence requirements, activity restrictions, privacy and security measures, anti-terrorism measures and other protections. “A consistent federal regulatory framework for stablecoins should balance their benefits and risks and preserve the separation of banking and commerce” it concludes.