The Federal Reserve is apparently obstructing the congressional attempts to regulate stablecoins, as indicated in a recent letter addressed to Fed Chairman Jerome Powell. The letter was sent by Patrick McHenry, the Chairman of the U.S. House of Representatives Financial Services Committee, and subcommittee chairs French Hill and Bill Huizenga.
The lawmakers were opposing two letters from the Fed: SR 23-7 concerning the Novel Activities Supervision Program, and SR 23-8 titled “Supervisory Non objection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens.” They expressed their concerns as follows:
“We worry that these actions are deliberately undermining the progress achieved by Congress in creating a regulatory framework for payment stablecoins. Furthermore, if these letters remain unaltered, they will unquestionably discourage financial institutions from partaking in the digital asset ecosystem.”
The letters, released concurrently, build upon a policy statement from January and enact additional restrictions on activities involving cryptocurrency assets. According to the legislators, the Fed letters “essentially prohibit banks from issuing payment stablecoins or participating in the payment stablecoin ecosystem” while “disguised as guidance that delineates a process through which these activities may be allowed.” The January policy extended the limitations imposed by the Office of the Comptroller of the Currency on national banks to state banks.
Moreover, the letter asserted that the Fed letters were disseminated without adhering to the notice and comment procedures mandated by the Administrative Procedure Act. The legislation referenced by the lawmakers is the Clarity for Payment Stablecoins Act of 2023, which was introduced by McHenry on July 20.
The letter from the committee members also contained a series of eight questions, primarily focused on the implementation of the guidance detailed in the two Fed letters. Additionally, the letter calls for documents to ascertain the timeline of the Fed letters’ composition.
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