senate committee Banking, Housing and Urban Community The US Senate Committee on Banking, Housing, and Urban Affairs held hearings from several expert witnesses with knowledge of stablecoins and calls for greater KYC/AML compliance.
At the hearing on Tuesday, the subject “Stablecoins: How they work, how they are used, and how are they at risk,” said Hilary Allen, a professor at the American University Washington College of Law, Alexis Goldstein, director of monetary policy at Open Markets, Jai Massari, partner at Davis Polk & Wardwell, and Dante Disparte chief strategy officer. and head of global policy at Circle addressed the U.S. Senator. About Some of the Risks Stablecoin May Have to the US Financial System and how lawmakers can handle control over the area.
Alexis Goldstein’s written testimony.indicateher opinion that Decentralized financing, or DeFi, is “mostly non-compliant” in terms of KYC verification, anti-money laundering, anti-terrorism financing, and current US sanctions, she said. due to “There is almost no KYC/AML verification in DeFi applications,” so stablecoins such as Pax Dollar (USDP) can be used to convert ransom payments from one cryptocurrency to another.
Massari addedthat US lawmakers Stablecoin issuers may consider operating under a federal charter. Rather than designating them as a depository institution like a bank, Massari states that having a regulated stablecoin issuer similar to a FDIC-insured bank is “ineffective” and “not necessary,” and she said. Companies can limit the risk of their stablecoin reserves to “Liquid assets, short-term assets, and require that the market capitalization of those reserves is not lower than the value tied to stablecoin.”
“New Federal Charter It is well designed to support the business model born out of stablecoin issuance, which is fully supported by short-term assets, liquid assets, and related payment services,” said Massari. Requirements can be set for the composition of reserve assets. while adjusting the leverage ratio or capital requirement according to the risk and other requirements in accordance with the nature of the business model and may limit stablecoin issuers from engaging in risky activities. to reduce other claims on reserve assets.”
In contrast, Disparte is the only witness to appear with direct ties to the stablecoin issuer.usePart of his written testimony to highlight use cases regarding digital assets. including empowering women and minority entrepreneurs and provide assistance While it is implied that changes in regulatory guidelines may be necessary for stablecoin, it is important for lawmakers to “Do no harm” and encourage innovation.
But not all witnesses who appeared before the committee seemed optimistic, according to Allen. said Stablecoins Could Be a “Real Threat to Financial Stability” in the US in her opinion Asset levels could grow to a point where they could displace the US dollar and limit the Federal Reserve’s ability to respond to inflation.
“Institutions of the private sector which has no authority to provide services for the public benefit will compete to control the money supply And it undermines the ability of central banks to control inflation or deal with deflation,” Allen said. “This is another reason to avoid policies that support stablecoin growth.”
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