WASHINGTON—Ahead of the House Financial Services Subcommittee onDigital Assets, Financial Technology and Inclusionhearing on stablecoins this week, NAFCU and CUNA each sent letters to the subcommittee sharing their outlooks on how the rules should be shaped.
NAFCU Vice President of Legislative Affairs Brad Thaler sent a letter to subcommittee leaders saying there is a need for clear regulations and supervisory framework—without which “poses risks to the adoption of these otherwise promising technologies.”
“[D]istributed ledger technology and other technologies that support a broad ecosystem of digital assets offer an array of potential operational efficiencies,” Thaler wrote. “For example, the ability to facilitate payment transactions that support smart contracts, either through use of stablecoins or other digital assets, may help members with specific business needs and potentially reduce credit unions’ operational costs. Most importantly, digital asset technologies can be designed with strong auditability features, which can enhance regulatory compliance and reduce instances of human error, fraud, and other misconduct.”
Recommendations Offered
Calling the draft bill “a step in the right direction,” NAFCU said it also supports:
- Using the Federal Reserve definition of an insured depository institution, which would include credit unions, to ensure the credit union industry does not face barriers to adopting digital assets and hinder its service to underserved and low-income communities
- Enforcement and examination by existing regulators – including the NCUA for credit unions – and a framework for oversight of non-depository stablecoin issuers
CUNA’s Perspective
Meanwhile, CUNA wrote that Congress should subject payment stablecoins to a regulatory framework that limits activity to insured depository institutions and their subsidiaries.
“Credit unions are highly regulated in their operation and credit union members are protected by a plethora of consumer protection laws,” the letter reads. “The digital assets sector currently operates in a largely decentralized environment outside of the traditional financial safeguards and generally without financial intermediaries where the role of stabilizer and protector generally rest.”
CUNA further stated the fundamental innovation of cryptocurrencies and other digital assets is the lack of financial intermediary, which it said also brings concerns.
‘Parity’ Needed
“The Presidential Working Group on Financial Markets recognized these risks and rightly directed Congress to promptly enact legislation to subject payment stablecoins to a federal prudential regulatory framework,” the letter reads “This legislation should direct that insured depository institutions, that are subject to stringent regulations and oversight, and their subsidiaries serve as the sole issuers and conduit for payment stablecoins to ensure the safety, security, and continuity of the market…Moreover, there must be parity amongst all depository institution charters—both bank and credit union—as approved stablecoin issuers.”
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