The stablecoin report published last month by the President’s Working Group on Financial Markets (PWG) made ripples across the crypto industry with its recommendation that Congress enact legislation to regulate stablecoin issuers like banks, but that appears to be a nonstarter among the crypto-literate on Capitol Hill.
At an event hosted by blockchain research firm Chainalysis on Monday, Rep. Tom Emmer (R-Minn.), a longtime crypto supporter and chairman of the Congressional Blockchain Caucus, pushed back against the recommendations, saying:
“I’ll put it bluntly this way: Regulating stablecoin issuers like banks, which is what the report suggests – it’ll kill American competitiveness.”
Rep. Jim Himes (D-Conn.), echoed Emmer’s reluctance to rush to enact the legislation recommended by the PWG.
“One shouldn’t assume that we’ll necessarily follow the recommendations,” Himes said. “I am also skeptical of the notion that all stablecoin issuers should be forced to be banks.”
Emmer also argued against the notion that stablecoins are unregulated, saying stablecoin regulation already exists at the state level in several states including New York and Wyoming.
The lack of crypto education on Capitol Hill – a growing concern for many supporters of the industry – was also cited by both Himes and Emmer as a reason not to rush to action.
Himes told the audience that he thought stablecoin regulation was “maybe not necessary right now, and certainly not likely right now.”
Emmer was more blunt:
“Most members don’t understand stablecoins, so expediting legislation could actually be a recipe for disaster,” he said.
Emmer, however, was quick to point out that his stance on stablecoin regulation doesn’t mean he is against regulating the industry in general.: Providing a “light touch regulatory framework” – starting with defining terms like “currency,” “commodity” and “security” – could help encourage innovation in the industry, he said.
Emmer also said that establishing the jurisdiction of the market regulators – the Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC), which are in the midst of a tug-of-war over crypto regulation – would help curb the “very dangerous practice of regulators and other bureaucrats in the marketplace regulating through enforcement action.”
“If we don’t clear up the gray regulatory space for the crypto industry, threats – like those that come from the SEC – of enforcement action are going to continue,” Emmer said.