The United States is not moving quickly enough to build a CBDC, according to a former CFTC chair

“We should take immediate action to expand access to financial services in other ways as well – the demand is too tremendous,” Tim Massad remarked.

Tim Massad, the former chairman of the Commodity Futures Trading Commission until 2017, said the United States is moving too slowly in modernising its payment networks.

At a Joint Economic Committee hearing on the role of digital assets in government on Wednesday, Massad said that a central bank digital currency, or CBDC, may be one way for the US to enhance its present payments systems, which he described as “slow” and “expensive.” Additionally, the previous CFTC chair said that although stablecoins may be used for this purpose, they posed some of the most pressing regulatory difficulties for the United States and posed considerable dangers.

Massad said that the use of stablecoins such as Tether (USDT) to transfer cash between exchanges is an excellent illustration of why the United States’ payment system has to be upgraded. He cautioned, however, that the stablecoin issuer’s reserves are unlikely to be put in “very secure liquid assets” such as the dollar, and hence are not protected in the same manner as money in conventional financial institutions. The former CFTC chairman said that he would advocate adopting “bank-like” standards while simultaneously prohibiting issuers from making loans in order to avoid the need for deposit insurance.

“CBDCs, stablecoins, and digital assets in general are often highlighted as ways to increase financial inclusion, and we should explore their potential,” Massad added. “We should take immediate action to expand access to financial services via more channels – the demand is too severe.”

Stablecoins, according to Coin Center head of research Peter Van Valkenburgh, are a “interesting sector” in the crypto realm, but he expressed worry over an apparent lack of regulatory certainty for issuers. “Undoubtedly, some stablecoin issuers are breaking the law,” Van Valkenburgh said, adding:

“There are also licenced stablecoin issuers, and there is the prospect of establishing a more robust federal framework for stablecoin regulation. I believe that we do not have a legal gap there; rather, we have an enforcement gap.”
Both Van Valkenburgh and Massad made their remarks in response to a report from the President’s Working Group on Financial Markets recommending that stablecoin issuers in the United States be subject to “adequate regulatory monitoring” comparable to that of banks. According to the organisation, regulation is “now required to address completely the prudential concerns created by payment stablecoin arrangements.”

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