U.S. Treasury Secretary Janet Yellen said in testimony before the House Financial Services Committee on Thursday that the government’s financial risk watchdog will require minimal federal oversight of stablecoin issuers, such as those in New York and Texas. He expressed a preference for a system that would set universal compliance standards beyond what states currently impose.

Supports the authority of federal regulators

The Financial Stability Oversight Council (FSOC), headed by Treasury Secretary Yellen, said, “It is important that there be a federal regulatory floor that applies to all states, and that federal regulators must ensure that stablecoin issuers hold such assets. “We believe that we should have the ability to decide whether publication should be prohibited.”

This is the main bottleneck in American legislation regarding stablecoin regulation. While Republican lawmakers have fought to expand the powers of state regulators, Democrats and Treasury Yellen have maintained the status quo regarding federal powers. Even with these rifts in mind, the Financial Services Committee previously approved a stablecoin bill with support from some Democrats, and it awaits a vote in the House.

Republican Party Chairman Patrick McHenry, who is leading the push for the legislation, used his opening question to Treasury Secretary Janet Yellen on the 6th to raise the issue.

Mentioning limitations on customer asset custody methods

Treasury Secretary Yellen also addressed the Securities and Exchange Commission’s (SEC) proposal to further restrict how investment firms can custody customer assets, including crypto assets. The proposed rule, which is on the SEC’s agenda to be completed by the end of the year, would require a broader range of customer assets to be held in “qualified custodians,” with banks and some lawmakers weighing in on the potential impact. , and even drew criticism from other regulators.

Treasury Secretary Janet Yellen said during the hearing that she had “concerns about the impact on banks and had to discuss them with the chairman.”

FSOC warned Congress and the crypto industry that if lawmakers fail to mandate new regulations for digital assets, FSOC may be forced to take action on its own. That could include subjecting the industry to Federal Reserve oversight.

｜Translation and editing: Rinan Hayashi
｜Image: Shutterstock
｜Original text: Treasury Secretary Yellen Says US Needs Better Stablecoin Regulation