WASHINGTON— The lack of a clear regulatory environment and appropriate supervisory framework poses risks to the adoption of otherwise promising technologies, such as digital assets, according to a letter sent by NAFCU ahead of a Senate Banking Committee hearing on the President’s Working Group (PWG) on Financial Markets’ report on stablecoins.
Similar to the letter NAFCU sent ahead of the House Financial Services Committee hearing on the same topic, Vice President of Legislative Affairs Brad Thaler noted that while the report on stablecoins represents a crucial first step towards bringing rules and regulation to emergent stablecoin adoption, the report adopts and cites the Federal Deposit Insurance Act's definition of an insured depository institution, which does not include credit unions.
"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."
‘Search for Alternative’
Thaler urged Congress to search for alternative ways to provide regulatory certainty and parity across financial services systems 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.
As CUToday.info also reported earlier, NAFCU President and CEO Dan Berger previously wrote to Treasury Secretary Janet Yellen to point out the risks of excluding credit unions from the legislation requiring all payment stablecoin issuers to be insured depository institutions.
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