Republicans seize regulatory authority over stablecoins from Gensler and the SEC
Added Funds Authorities over banking and credit unions would take over from the SEC under proposed stablecoin legislation.
In response to the Securities and Exchange Commission’s (SEC) crypto-negative posture, Republicans in the House have introduced new stablecoin legislation that would remove SEC authority over stablecoins used for making payments.
The SEC’s inquiry into BUSD, a shared stablecoin between digital asset infrastructure provider Paxos and multinational crypto exchange Binance, coincides with the release of the draft as discussions continue towards a full framework for stablecoins. As it stands, the law would give federal and state bank and credit union authorities oversight over stablecoins.
As a result of changes brought about by partisan negotiations, the law would no longer deal with algorithmic stablecoins or require research into a central bank digital currency. Instead, the measure would put a finer emphasis on payment stablecoins and serve as a companion piece to a larger law that would regulate digital asset markets in the United States.
The decision to restrict the SEC’s authority is not unexpected, given the widespread criticism of SEC Chair Gary Gensler’s stance on digital assets from both industry insiders and legislative Republicans.
Many others, including the Republican chair of the House Financial Services Committee in North Carolina, Patrick McHenry, were unhappy with Gensler because he wouldn’t say whether he considers ether to be a security or a commodity. The SEC chair’s declaration of authority over stablecoins has also been a source of growing frustration.
A source involved with last year’s bipartisan negotiations surrounding a stablecoin regulatory framework said that Gensler’s assertion that they were a security investment that would come under the SEC’s authority placed him at odds with other Biden administration officials.
Some in the industry think Gensler undermined negotiations between McHenry, California Democrat Rep. Maxine Waters, and the Treasury Department last year so that the SEC could retain complete control of stablecoins in the United States, although another person aware of the negotiations disputes this.