A high-profile blockchain lobby group is urging United States lawmakers to adopt a “technology-neutral” approach when it comes to stablecoin regulation, arguing that dollar-pegged cryptocurrencies do not pose a system risk to the financial system.
In a 17-page letter addressed to the President’s Working Group on Financial Markets, which includes regulators from the Department of Treasury and Federal Reserve, the Chamber of Digital Commerce outlined a six-point plan for future regulatory action involving stablecoins.
According to the group, stablecoin laws should be technology-neutral, regulate in a manner that is proportionate to risk, ensure that the U.S. maintains a competitive advantage in blockchain, recognize stablecoins as digital payment systems as opposed to investments, ensure compliance with existing Anti-Money Laundering guidelines and be underpinned by a flexible, principles-based regime.
On the topic of technology neutrality, the Chamber said stablecoins “should not be subject to a new regulatory regime simply because new technology is being deployed,” adding:
“New regulatory treatment for stablecoins should only be invoked to the extent necessary to mitigate unique risks that are not currently addressed by the regulatory regime or to account for stablecoins’ ability to reduce risk or provide new benefits.”
Established in 2014, the Chamber of Digital Commerce has a vast membership spanning blockchain, traditional finance and the information technology sector. Its executive committee includes Binance.US, Bitpay, BlockFi, Citigroup, BNY Mellon, Circle, BNP Paribas, Fidelity Investments, Goldman Sachs, IBM, Mastercard, Visa and Microsoft, among others.
U.S. regulators are trying to tame the rapidly growing stablecoin market, which has a collective value of $130 billion at the time of writing. As Cointelegraph reported, the Biden administration is considering grouping stablecoin issuers in the same category as traditional banks for the purpose of regulation. Last month, Federal Reserve Chairman Jerome Powell said the central bank has no intention to ban crypto, but that stablecoins require more stringent oversight.
As outlined in the letter, the Chamber of Digital Commerce believes that stablecoins are “already well-regulated at the state and federal level.” A regulatory regime that conflates stablecoins with securities risks “imposing an overly rigid” system that “stifles innovation.” The Chamber further explained:
“To protect consumers and reduce costs, we encourage the streamlining of state-level regulatory frameworks for stablecoins and the issuance of special-purpose charters by federal banking regulators for stablecoin companies7 seeking to operate nationally.”