Republican legislators have voiced their dissatisfaction with the Federal Reserve’s most recent initiatives to improve its monitoring of cryptocurrency and stablecoin activity within banks.
These legislators have claimed that these measures are impeding the progress of their planned stablecoin regulation law.
Reps. French Hill from Arkansas, Bill Huizenga from Michigan, and Patrick T. McHenry from North Carolina, who chairs the House Financial Services Committee, all joined forces to sign a letter addressed to Fed Chair Jerome Powell.
The Fed is impeding the passage of stablecoin legislation.
According to Republican senators, the new regulations could obstruct the advancements made by Congress in building a regulatory framework for payment stablecoins.
The MPs also emphasised how the additional regulatory scrutiny can have a dissuasive effect on financial institutions thinking about joining the digital asset market.
The Federal Reserve’s letter, SR 23-8, outlining the conditions for state banks wishing to engage in stablecoin-related operations is of special significance.
The central bank’s requirement that banks acquire written supervisory approval before moving forward with stablecoin operations has sparked concerns about the viability of such operations in practice.
The “Novel Activities Supervision Programme,” SR 23-7, was previously unveiled by the Federal Reserve in an effort to improve the monitoring of banking organisations engaged in cryptocurrency, distributed ledger technology, and technology-driven partnerships with non-bank companies.
The MPs pointed out that even though it seems like a legal procedure, the Federal Reserve’s intention to permit these actions is still questionable, particularly in the case of public, permissionless blockchains.
Lawmakers Ask the Federal Reserve for Clarification
In order to get answers, the MPs asked the Federal Reserve a number of questions, such as whether cooperation with state financial authorities is part of the goals of the central bank, particularly when certain payment stablecoin activities are approved by state regulators.
The Federal Reserve has until September 29 to answer the legislators’ questions.
The central bank has acknowledged receiving the letter and stated that it will reply.
This development occurs as the House Financial Services Committee continues to work on developing a thorough regulatory framework for stablecoins.
The politicians stress the need for a regulatory structure established by Congress to protect consumer interests and give market participants clarity, despite difficulties in the bipartisan discussions.
The interaction between legislative ideas and regulatory actions will continue to influence the stablecoin regulatory landscape as the situation develops.