WASHINGTON— The absence of a clear regulatory environment and appropriate supervisory framework poses risks to the adoption of otherwise promising technologies, such as digital assets, according to NAFCU.
The trade group expressed its position in a letter sent ahead of a House Financial Services Committee hearing to review the President's Working Group (PWG) on Financial Markets' report on stablecoins
Brad Thaler, NAFCU's vice president of legislative affairs, noted that while the report on stablecoins represents an important first step towards bringing rules and regulation to emergent stablecoin adoption, it also adopts and cites the Federal Deposit Insurance Act's definition of an insured depository institution, which does not include credit unions.
An ‘Arbitrary Approach’
"By adopting this narrow definition, which includes banks and savings associations but not credit unions, the Report risks legislators and other regulators interpreting the Report as recommending that Congress enact legislation requiring a stablecoin issuer to obtain a bank charter – not either a bank charter or a credit union charter," wrote Thaler. "This arbitrary approach, if left unchecked, will result in competitive disadvantages, market distortions, and reduced innovation by excluding an entire class of federally insured and comprehensively supervised depository institutions from new markets for innovative products and services."
In the letter, Thaler called on Congress to explore ways to provide regulatory certainty and parity across the financial services system and ensure a level playing field for all.
"We urge you to ensure the needs of credit unions are considered in any legislative approach you consider in the future," concluded Thaler.
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