Scott Beck, chief govt 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 moderately than crypto companies.
Talking earlier than the Texas Work Group on Blockchain Issues in Austin on Friday, Beck steered limiting the issuance of U.S. dollar-backed stablecoins to licensed banks moderately than issuers like Circle. The United Texas Financial institution CEO cited a November report from the President’s Working Group on Monetary Markets, during 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 problem and handle stablecoins,” stated Beck. “Banks have the experience and authorized framework for dealing with cash, and in contrast to as we speak’s stablecoin actors, banks are extremely regulated at each the state and federal stage.”
“Bringing stablecoin actions into the banking sector and prohibiting non-banks from issuing stablecoins will improve client safety and appeal to extra 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 had been holding belongings at “different establishments” in distinction to banks, “successfully sucking deposits out of the banking business.” He added that some stablecoins had been notably susceptible to runs, probably threatening the financial system ought to the market attain a sure dimension, 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 liable 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 fashioned in September 2021 following the passage of Home Invoice 1576. In line with the group’s web site, its mission contains creating a framework “for the enlargement of the blockchain business in Texas and advocate insurance policies and state investments in reference to blockchain expertise.”