House Financial Services Examines PWG Stablecoin Report

On February 8, the House Financial Services Committee heard testimony from Under Secretary of the Treasury for Domestic Finance Nellie Liang outlining key findings from the President’s Working Group Report on Stablecoins. The report recommends several steps to address risks posed by stablecoins including the enactment of legislation to ensure that payment stablecoins are subject to a federal prudential framework on a consistent and comprehensive basis. The report specifies that legislation covering stablecoins should require issuers to be insured depository institutions, bring custodial wallet providers under federal supervision, and require issuers to comply with activities restrictions that limit affiliation with commercial entities.

While Members of Congress on both sides of the aisle expressed support for the utility of stablecoins in the payment system, there are still diverging thoughts on how to regulate these digital assets. In her opening remarks, Committee Chairwoman Maxine Waters (D-CA) noted that the Committee should ensure that, “innovation in this space is responsible, that it provides robust consumer and investor protection, that it mitigates environmental impact, and that financial inclusion is front and center.” Ranking Member Patrick McHenry (R-NC) stated “requiring stablecoins to only be issued by banks would be a major obstacle for us continuing to foster innovation within this nascent industry.”

Comprehensive, bipartisan legislation covering digital assets is unlikely to gain traction this year but will likely be a focus of further congressional hearings and reports. Click here to read a fact sheet from Treasury summarizing the report on stablecoins.