- U.S. lawmakers were split down party lines on the subject of stablecoins in a hearing yesterday
- The U.S. Senate Committee on Banking, Housing, and Urban Affairs met to debate the merits of stablecoins
- Republicans were generally more in favor of stablecoins that Democrats
A split down party lines emerged yesterday as U.S. lawmakers debated the benefits of and concerns associated with stablecoins. In a frostier exchange than was seen in last week’s U.S. House Financial Services Committee, stablecoins were under the microscope as Democrats and Conservatives debated the pros and cons of the new asset sub-class. Republican members were more open to the idea of using stablecoins within the financial system, while Democrats were typically against the concept, citing the risks involved in their use. Any legislation on the issue is likely to be hard to come by, given the split in sentiment.
Toomey Stands Up For Stablecoins
The most vocal supporter of stablecoins and what they could offer was Senator Pat Toomey, one of three senators who tabled a series of amendments to the Infrastructure Bill to reduce the negative impact on the U.S. cryptocurrency industry. Toomey, the top Republican on the Banking Committee, told the assembly that stablecoins had the potential to increase the speed of payments and reduce costs, a theory that is being put to the test with the Meta/Novi trial on WhatsApp.
Toomey added that lawmakers need to be careful not to stymie innovation with overly harsh legislation, advocating for stablecoin issuers being allowed to choose their method of regulatory model, including operating under a bank charter.
Critics Highlight Continuing Tether Issues
Critics pointed, as expected, to the issue of Tether and its low cash backing compared to its $77 billion market cap, illustrating how the stablecoin issuer is still a running sore in the space. They also pointed to the fact that many stablecoins actually fluctuate in price at times of high demand when they are supposed to be stable.
It’s clear, then, that a compromise over the regulatory fate of stablecoins is going to take lengthy negotiations.
