Industry legislators and experts discussed the importance of Stablecoins supported by the US dollar in the financial system and the urgency of a regulatory framework for this assets during a hearing that was convened on 11 March by the US House Committee on Financial Services.
With the title “Navigating through the ecosystem of digital payments: investigating a federal framework for payment staboins and consequences of a digital currency of the US central bank”, the hearing also discussed concerns about a potential central bankdigalcurrency (CBDC) in the US.
Stablecoins vs. CBDCS
The hearing relates to potential benefits arising from stablecoins and criticized harmful properties of CBDCs. The chairman of the House Financial Services Committee French Hill argued that Stablecoins offers benefits compared to a CBDC by promoting competition and innovation.
According to Hill:
“In contrast to Stablecoins, who are active in a competing market, a CBDC would concentrate financial power within the federal government, limit consumers’ choice and undermine the innovation that has made our financial markets the strongest in the world.”
Hill also emphasized that when correctly regulated, Stablecoins can improve the dominance of the US dollar and modernize payment systems without excessive government control.
Representative Bill Huizenga repeated the potential of stablecoins and stated that they could simplify the American payment system. In addition, Congressman Andy Barr added that Stablecoins help maintain the status of the US dollar against competitors, including foreign CBDCs such as the digital Yuan.
Charles Cascarilla, CEO of Paxos, rejected the idea that a CBDC would offer benefits that go beyond those offered by Stablecoins. He said:
“Historically, innovation in the US is both in technology and in the financial system, from the private sector, and that is what we must continue to embrace.”
Congressman Tom Emmer supported the prohibition of CBDCs in the US and said that “President Donald Trump is grateful for understanding this” and signing an executive order that prohibits them.
Emmer refers to the Trump order signed on January 23, which sets up a framework to stimulate the growth of stablecoins and at the same time prohibit federal agencies to pursue CBDC plans.
Legal considerations
The hearing strengthened the growing consensus that Stablecoins require a clear legal framework to guarantee stability and adoption while the government occurs.
Representative William Timmons emphasized that the clarity of the regulations is a priority, and notes that digital assets remain vulnerable to enforcement actions that can stimulate innovation abroad without clear legislation.
The stable law, which aims to regulate digital payment instruments such as Stablecoins, was central to the discussion. The bill proposes to issue banks and non -banks Stablecoins, with supervision ranging on the basis of the amount issued.
It is also mandatory for US dollars or approved assets to fully support Stablecoins, ensures a public exchanging policy and the issues of topics for bank -like supervision.
Caroline Butler, worldwide head of digital assets at BNY Mellon, emphasized the importance of the asset control framework that was laid in the stable law and stated that client assets should never be mixed with fixed assets.
Cascarilla strengthened this attitude and argued that legal protection for reserve possession is crucial for maintaining the value of a stablecoin.
Randall GUCHNER, chairman of the financial institutions of Davis Polk & Wardwell, also emphasized that the requirements of the stable law that guarantee safe support for Stablecoins can make these assets a ‘no questions’.
Carole House, a senior fellow in the Goecomics Center of the Atlantic Council, recognized the cyber security provisions of stable law and emphasized their interest in securing digital financial infrastructure.
Stablecoins and financial inclusion
In addition to legal considerations, the hearing also pointed to the role of stablecoins in the financial inclusion.
Cascarilla noted that Stablecoins offer a means for non -balanced people to access digital dollars via smartphone portfolios, which makes financial participation for billions worldwide that do not have traditional bank access.
Banks also see a role for themselves in the Stablecoin ecosystem. Butler stated that financial institutions could offer trust and trust, which means that Stabilein Payment Mechanisms develop alongside traditional payment rails.