The American Bankers Association (ABA) has called on legislators to regulate stablecoin issuers in a manner similar to banks, arguing that two bills currently under discussion fail to meet the mark.
This week, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion examined two bills regarding stablecoin regulation. One was presented by committee chairman Patrick McHenry, while the other was put forth by ranking member Maxine Waters.
The ABA has expressed support for certain aspects of both bills but believes that they fall short in several respects.
Specifically, McHenry's bill does not include financial stability as a criterion that regulators must consider when evaluating applications from payment stablecoin issuers. Furthermore, neither bill adequately addresses the need for public disclosure from issuers or mandates third-party audits of reserves.
In a letter, the ABA stated, "Stablecoin issuers often behave similarly to banks, as they facilitate payments, connect to investment platforms, and store value...Applying the principle of 'same activity, same risk, same regulation' will help ensure equal protection for all customers, regardless of their engagement with the financial marketplace, and maintain a strong, secure, and competitive financial system."
In a separate development, the UK Treasury Committee has called for the regulation of consumer trading in unbacked cryptocurrencies such as bitcoin and ether as a form of gambling.
The influential cross-party committee of Members of Parliament (MPs) declared that cryptocurrencies like bitcoin lack inherent value and serve no meaningful social purpose. They also consume significant energy resources and are employed by criminals in scams, fraud, and money laundering.
The committee's conclusions run counter to Prime Minister Rishi Sunak's ambitions of establishing the UK as a global hub for cryptoasset technology. They also cast doubt on the government's plans to regulate consumer crypto trading as a financial service, suggesting that such regulations may create a misleading perception of safety and protection.
In its final remarks, the committee drew notable and critical parallels between Sunak's prior endorsement of non-fungible tokens (NFTs), which he has since abandoned, and his public support of cryptoassets.
"As the future benefits of cryptoassets remain uncertain, the government should adopt a balanced approach to fostering the development of cryptoasset technologies and avoid allocating public resources to projects without a clear and beneficial purpose, as seems to have been the case with its now-abandoned Royal Mint NFT," the report concludes. "It is not the government's role to promote specific technological innovations merely for the sake of doing so."
Harriett Baldwin MP, chair of the Treasury Committee, points out that the events of 2022 highlighted the risks the cryptoasset industry poses to consumers, with "substantial portions of it resembling the wild west."
"Due to its lack of intrinsic value, significant price volatility, and absence of discernible societal benefits, consumer trading of cryptocurrencies like bitcoin more closely resembles gambling than a financial service and should be regulated accordingly," she asserts. "By speculating on these unbacked 'tokens,' consumers must understand that they could potentially lose all their funds."
The committee's conclusions have been strongly disputed by CryptoUK, an industry association.
Ian Taylor, a board advisor at CryptoUK, responds, "We find these claims both concerning and disappointing, as they are unhelpful, false, fundamentally flawed, and unsupported. This statement fails to acknowledge the true nature, purpose, and potential of the crypto industry."
"We recognize that consumer risk exists, and it should be mitigated through education, awareness, and a more robust regulatory framework. However, equating cryptocurrency with gambling is both inaccurate and misleading."