Republicans Accuse Federal Reserve of Hindering Stablecoin Regulation

Three Republican lawmakers have accused the Federal Reserve of undermining Congress's efforts to regulate stablecoins, potentially hindering the growth of the digital asset space.

Representatives French Hill, Bill Huizenga, and Patrick T. McHenry have written a letter to Federal Reserve Chair Jerome Powell in which they express their concerns about the central bank's actions blocking stablecoin regulation. They argue that this stance could discourage banks from participating in the digital asset market.

According to the lawmakers, the Federal Reserve's recent supervisory letters aimed at the stablecoin market could create hesitancy among banks to engage with digital assets. These letters were issued shortly after the House Committee on Financial Services unanimously approved the Clarity for Payment Stablecoins Act, which seeks to establish a clear regulatory framework for stablecoins.

In their letter to Chair Powell, the lawmakers argue that the timing of the Federal Reserve's actions undermines the collaboration between the central bank and Congress. They believe that this serves as an indirect ban on banks participating in the stablecoin market.

Furthermore, they highlight that the Federal Reserve did not follow the Administrative Procedure Act's notice and comment procedure, which allows for the inclusion of stakeholder and public input.

In light of these concerns, the lawmakers have requested clarifications from the Federal Reserve regarding its stance on stablecoin regulations. They have set a deadline of September 29 for a response, and the central bank has acknowledged their letter and intends to reply.

Stablecoin regulation has been a hot topic in the cryptocurrency industry, with various stakeholders advocating for clear guidelines. The outcome of this dispute between Republican lawmakers and the Federal Reserve could have significant implications for the future of stablecoin adoption and the overall development of the digital asset market.