30s Summary

Former US Senator Pat Toomey believes several matters regarding stablecoin companies need clarification before establishing relevant regulations. Toomey mentioned concerns about stablecoin companies’ liquidity and their insurance on bank deposits, expressing skepticism about the Federal Reserve’s responsibility given their perceived unfriendliness towards such technology. He anticipates regulatory motion on the issue by 2025. Greater clarity on stablecoin regulations is being demanded, with upcoming Congress bills including the Clarity for Payment Stablecoins Act being considered. Experts warn of the necessity for definitive stablecoin policies to avoid potential economic disruptions resulting from these companies’ increasing demand for government assets.

Full Article

Ex-Senator Pat Toomey from the USA thinks there are a bunch of things we need to clear up about stablecoin companies and what they’re based on before we really get a handle on all the regulations we need for stablecoin in America.

In a chat with Cointelegraph’s Turner Wright, Toomey from Pennsylvania listed a few areas that are giving him pause, like what happens when a stablecoin company goes bust, what reserves they need to have, insurance on bank deposits, and who gets to call the shots with regulations. He’s really not sure the Federal Reserve should be the one responsible because he reckons they’re not super friendly to this technology.

He also reckons we’ve got a ways to go before we’ve worked through all the tricky and kind of complicated bits of this issue. But, even with all of that, Toomey’s pretty confident that there’s plenty of political support for getting some regulatory clarity around stablecoin.

He’s put it out there that lawmakers will probably start getting some real momentum on this issue from 2025, once we’ve sorted some of the more immediate stuff like deciding who’s in charge of what and where the money is going.

There’s been a growing call for more clarity on stablecoin regulations. There are a few key bits of crypto legislation that are up for consideration in the next term of Congress, including Senator Bill Hagerty’s Clarity for Payment Stablecoins Act. This bill introduced the idea of regulating small stablecoin firms at the state level, instead of making it a federal issue.

People who are well-respected in the industry keep flagging that we really need to buck up and get comprehensive stablecoin policies sorted out. Chris Dixon from venture capital firm a16z, told an audience at the Permissionless III event in October that we need a clear stablecoin plan to avoid a big disaster, like the hypothetical collapse of FTX.

This could have serious knock-on effects way beyond the crypto world and into the wider economy, because stablecoin companies keep driving up demand for things like Treasury Bills and other government stuff by using them to back up their tokens. At a meeting on October 29, the US Treasury’s Borrowing Advisory Committee noted that stablecoin companies are having a growing influence on demand for Treasury Bill. One Committee member even suggested that we might need a private, permissioned blockchain to deal with this rising demand.