Scott Beck, chief government officer of United Texas Financial institution, known as on members of the state’s blockchain working group to advocate coverage for leaving stablecoins to banks reasonably than crypto companies.
Talking earlier than the Texas Work Group on Blockchain Issues in Austin on Friday, Beck prompt limiting the issuance of U.S. dollar-backed stablecoins to licensed banks reasonably than issuers like Circle. The United Texas Financial institution CEO cited a November report from the President’s Working Group on Monetary Markets, through which the group stated stablecoin issuers needs to be held to the identical requirements as insured depository establishments together with state and federally chartered banks.
“If such stablecoins are outlined to be ‘cash’, banks are the correct financial actor to difficulty and handle stablecoins,” stated Beck. “Banks have the experience and authorized framework for dealing with cash, and in contrast to right now’s stablecoin actors, banks are extremely regulated at each the state and federal degree.”
He added:
“Bringing stablecoin actions into the banking sector and prohibiting non-banks from issuing stablecoins will improve shopper safety and appeal to further sources and capital to this rising space of financial exercise.”
In response to questioning from working group member and MoneyGram basic counsel Robert Villaseñor, Beck claimed that stablecoin issuers like Circle have been holding property at “different establishments” in distinction to banks, “successfully sucking deposits out of the banking business.” He added that some stablecoins have been notably weak to runs, probably threatening the economic system ought to the market attain a sure measurement, and leaving the issuance to banks ensured Know Your Buyer guidelines can be adopted.
Lee Bratcher, president of the Texas Blockchain Council and in attendance on the listening to, challenged Beck’s proposal as “anti-competitive.” The financial institution CEO countered that one of many key variations between licensed banks and personal firms issuing stablecoins was that for the previous, the money behind the tokens would stay “sitting on the Fed,” additionally guaranteeing the funds can be FDIC insured.
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Circle’s USDC dollar-pegged stablecoin is supposedly 100% backed by money or money equivalents, together with financial institution deposits, Treasury payments, or business paper. The stablecoin issuer introduced in March that monetary establishment BNY Mellon can be answerable for custodying its USDC reserves — greater than 52 billion cash are in circulation as of the time of publication.
The Texas Work Group on Blockchain Issues was formally shaped in September 2021 following the passage of Home Invoice 1576. In keeping with the group’s web site, its mission contains growing a framework “for the enlargement of the blockchain business in Texas and advocate insurance policies and state investments in reference to blockchain know-how.”
