Senate Banking Committee Wants Clarity on Stablecoins: Sends Letters to Tether, Coinbase, Circle
Senator Sherrod Brown appears to be keen on understanding how the process of stablecoin minting and redemption actually work. A comprehensive regulatory regime for stablecoin is the need of the hour, a failure to roll out one will prompt the watchdogs to step in.
The head of the US Senate Banking Committee has called upon stablecoin issuers and platforms to disclose their process. Sen. Sherrod Brown (D-OH), Chair of the Senate Banking, Housing, and Urban Affairs Committee, has sent letters to Coinbase, Gemini, Paxos, TrustToken, Binance.US, and Centre, seeking information on what steps these companies are taking towards consumer and investor protection.
Stablecoin Risks Concerns
For the most part, the United States has been a trendsetter when it comes to embracing new technological advancement and innovation. However, the regulators are yet to apply a similar approach towards cryptocurrencies and specifically stablecoins.
Several high-profile authority figures have highlighted stablecoins as a substantial threat to the global financial system, time and again. But this time, Senator Sherrod Brown is keen on understanding the workings behind stablecoins and the risks they pose.
In his letter to the payment technology company, Circle, the Senator stated,
“I have significant concerns with the non-standardized terms applicable to the redemption of particular stablecoins, how those terms differ from traditional assets, and how those terms may not be consistent across digital asset trading platforms.”
Policymakers’ Escalating Effort on Understanding Stablecoin
He also asked CEO Jeremy Allaire to clarify the essential operational features of the USDC stablecoin. These include the basic purchase, exchange, or minting process, redeeming of USDC, and receiving USD, requirements, or limits (if any), including any minimum redemption size, waiting period, or qualifications.
Questions about USDC issuance and circulation were also mentioned, among others. Brown set December 3 as the last date for the digital asset company to respond.
While emphasizing the rapidly ballooning size of the stablecoin sector, Brown acknowledged the need for better understanding and clarity on how these assets function and their potential risks. The Senator referenced the stablecoin report compiled by the President’s Working Group (PWG), published earlier this month.
The highly anticipated report in question was released by a group of regulators in the US that urged the lawmakers to take subject stablecoin-based companies to similar stringent federal oversight as traditional financial institutions such as banks.Source