The Conference of State Bank Supervisors (CSBS) expressed its concerns about legislation in Congress related to stablecoins.
In a letter to the leaders of the House Financial Services Committee, CSBS officials detailed their concerns and suggested some changes to the legislative framework outlined in the STABLE Act.
“As currently drafted, the STABLE Act would effectively centralize power over a nascent industry in a single federal agency. This approach would undermine the strategic advantage of cooperative federalism that has enabled American innovation for centuries and positioned the United States as the world leader in financial services,” the letter states.
Specifically, state bank supervisors urge Congress to make the following changes:
- Focus stablecoin issuer activities to protect market stability and predictability,
- Eliminate dangerous, unnecessary preemption of state authority,
- Provide actual parity for state stablecoin issuers,
- Ensure sufficient capital and liquidity requirements, and
- Protect consumers in the event of issuer bankruptcy.
“Without the adoption of critical changes, the legislation will fall short of establishing the national framework necessary to promote American leadership in digital assets,” CSBS President and CEO Brandon Milhorn said.
The letter added that many states already have their own framework in place.
“For more than a decade – while the federal government stood largely idle or in opposition – the states have provided innovative frameworks for digital asset firms and stablecoin issuers to grow and offer new services to consumers. Several states have digital asset frameworks in place and already regulate over $50 billion in stablecoin activity,” the letter states.
They added that a balance of authority between state and federal regulators is vital for consumer protection, market stability, and industry innovation.
The CSBS is the national organization of financial regulators from all 50 states, American Samoa, District of Columbia, Guam, Puerto Rico, and U.S. Virgin Islands.