FOR IMMEDIATE RELEASE
April 19, 2023
William Pierre-Louis, Jr.
Consumer Advocacy Groups Oppose Weak Stablecoin Bill
Proposed legislation would provide limited oversight and could amplify coins’ risks
Washington, DC – A new stablecoins bill proposal being discussed today in Congress would fail to adequately address the many risks that the industry posed to consumers, investors and financial markets, according to Americans for Financial Reform, Demand Progress and a dozen consumer protection groups. The bill is a focus of today’s hearing held by the House Financial Services’ Subcommittee on Digital Assets, Financial Technology and Inclusion.
“This bill proposes a light touch regulatory regime for these “un-stable” coins that would fast track stablecoin issuers’ approval with limited real oversight and give them the same access to the Federal Reserve services that banks have – mainstreaming these risky assets and amplifying their risks,” said Mark Hays, senior policy analyst with Americans for Financial Reform and Demand Progress.
The recent failure of SVB and other banks due to their questionable business practices, inadequate oversight by regulators, and regulatory rollbacks by Congress has underscored the importance of establishing robust regulatory oversight for financial institutions. The groups fear that advancing the proposed stablecoin bill would fail to apply this lesson and would further legitimize a risky asset class mostly used for speculative investment.
“Members of Congress should oppose this bill as introduced, and instead should refocus their efforts on supporting regulators’ existing authority to regulate stablecoins and other crypto assets. Securities regulators, banking regulators, the DOJ and FSOC have powers they can use today to exercise real oversight over stablecoin issuers, “said Hays. “If the Biden Administration is concerned about the consumers that will be harmed when the next stablecoin goes to zero, they should urge these regulators to start using them now.”
The letter, signed by Action on Race and the Economy, Americans for Financial Reform, Center for LGBTQ Advancement & Research, Center for Responsible Lending, Demand Progress, National Community Reinvestment Coalition, National Consumer Law Center (on behalf of its low-income clients), National Fair Housing Alliance, Public Citizen, Revolving Door Project, Texas Appleseed, U.S. PIRG, Virginia Citizens Consumer Council, and 20/20 Vision, is available here.