Senator Elizabeth Warren Urges Legislators to Consider ‘Magnitude’ of Risks in Stablecoin Bill
Senator Elizabeth Warren slammed interventions to advance a stablecoin bill in an April 9 letter sent to House Financial Services Committee Chair Patrick McHenry (R-NC) and Rep. Maxine Waters (D-CA).
Despite McHenry and Waters working on a structure, talks concerning who should be the stablecoin issuers’ primary regulator have stagnated for a long time.
Sen. Elizabeth Warren, a crypto critic, warned House legislators working on a bill to govern stablecoin that the assets might significantly impact national security and the banking system.
A letter to Rep. Maxine Waters (D-CA) and Patrick McHenry (R-NC), House Financial Services Committee Chair, slammed efforts to advance a stablecoin bill that has encountered obstacles over the past year.
In the April 8 letter, Warren noted that the interventions to develop new regulatory structures concerning the $157B stablecoin market, including those seeking to onboard stablecoins deeper into the banking industry, might intensify and embed the risks instead of alleviating them.
Stablecoin Bill Entangled in Bilateral Wrangles
She stressed the importance of considering the seriousness of the risks while considering proposals to govern stablecoins. Further, she said it was essential to avoid unveiling stablecoin laws that could cause another financial catastrophe.
Over the summer, the stablecoin bill progressed from the House Financial Services Committee but became entangled in bilateral wrangling. In this case, Congressional Republicans blamed the White House for rejecting it.
At that time, Waters claimed the bill was ‘profoundly challenging’ owing to a provision permitting regulators to sanction stablecoin issuance without input from the Federal Reserve.
Despite Ranking Democrat Waters and McHenry working on a framework, talks concerning who should be the primary regulator for stablecoin issuers have stagnated for some time.
Warren’s letter might diminish backing for a stablecoin bill in the Senate. She is a Senate Banking Committee member whose focus has been on priorities beyond crypto. Senator Sherrod Brown, who has also been fed up with crypto, leads the committee.
Stablecoin Facilitating Illegal Finance Movement
Warren also expressed concerns regarding using stablecoins in illegal finance in the letter, quoting the United States Department of Treasury’s earlier remarks. In a terrorist financing report printed in February, the Treasury examined the high utilization of stablecoins.
On April 9, the Senate Banking Committee held a hearing to deliberate about illicit finance and stablecoins. Wally Adeyemo, United States Deputy Treasury Secretary, expressed concerns regarding the utilization of ‘dollar-founded stablecoins’ and called for implementing procedures to prevent terrorists.
Warren informed legislators to tread cautiously. She said that as Congress discusses the most suitable regulatory framework for stablecoins, they must be cautious about incorporating stablecoins into the formal banking system without robust regulations promoting soundness and safety. Additionally, they must be wary of the absence of regulations that reduce risks to clients and national security.
