U.S. Senate Banking Committee to Convene on Stablecoins

The U.S. Senate’s Banking, Housing, and Urban Affairs Committee will hold a hearing on Dec. 14 to discuss stablecoins.

The meeting titled “Stablecoins: How Do They Work, How Are They Used, and What Are Their Risks?” will be streamed live from the committee website.

The witnesses have been confirmed as Ms. Alexis Goldstein, Director of Financial Policy at the Open Markets Institute, and Professor Hilary J. Allen, from the American University Washington College of Law.

Stablecoin Scrutiny Escalates

The hearing follows a round of letters sent out by Senate Banking Chair Sherrod Brown targeting CEOs of major stablecoin issuers.

The letters, dispatched on Nov. 23, were sent to Coinbase, Gemini, Paxos, TrustToken, Binance, and Centre. Sherrod was seeking clarification on redemption processes, issuance, and trading of stablecoins, presumably as a basis to work from in the upcoming hearing next week.

On Dec. 8, a Congress hearing titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States” took place. It was attended by industry CEOs and served to clarify some of the misconceptions policymakers have regarding the crypto industry and its underlying technology.

In early November, the Treasury Department also eyed stablecoins, recommending that they were subject to “appropriate federal oversight.” The President’s Working Group also released a report on stablecoins recently calling on lawmakers to restrict their issuance to banks.

Stablecoin supply has been increasing recently as more are minted by Tether and the like. According to CoinGecko, stablecoin market capitalization is at a record high of $160 billion. Tether accounts for almost half of that, or 48%, with a record 77 billion USDT in circulation.

Omarova Pulls Out

In a brighter development for the crypto industry, the staunch anti-banking and anti-crypto nominee for the Comptroller of the Currency (OCC), Saule Omarova, has pulled out.

On Dec. 7, President Joe Biden stated that he had accepted the request for withdrawal, adding, “But unfortunately, from the very beginning of her nomination, Saule was subjected to inappropriate personal attacks that were far beyond the pale.”

The outspoken critic of Wall Street banks and the crypto industry faced a lot of pushback from both Republicans and Democrats alike. Her withdrawal has been widely seen as a positive for the crypto industry. On Dec. 6, pro-crypto Senator Cynthia Lummis posted her own take on the nomination.