Patrick McHenryChairman

Washington, February 8, 2022 -

Today, the House Committee on Financial Services is holding a hearing with Treasury Under Secretary Nellie Liang to examine the President’s Working Group on Financial Markets’ report on stablecoins. With a clear federal regulatory framework, stablecoins hold promise as a potential cornerstone of the modern payments system.

Watch Republican Leader Patrick McHenry’s (NC-10) opening remarks here.

Read Republican Leader McHenry’s opening remarks as prepared for delivery:

“Thank you, Madam Chair.

“Under Secretary Liang, we appreciate your participation today on behalf of the Presidential Working Group on Financial Markets. 

“We need legislation. We agree on that.

“Regardless of what some may believe, it’s our job on Capitol Hill to develop legislation to direct regulatory action. And, let me be clear, it is specifically the House Financial Services Committee that will lead this legislative effort and bring clarity to this ecosystem.

“Currently, there is no federal law to address digital assets. With nearly a quarter of American adults now invested in crypto, we must move quickly to put in place a framework that clearly defines the rules of the road.

“The good news is that Financial Services Republicans have already laid the foundation for the work that must be done to maintain the U.S. as a leader in the digital asset revolution.

 “In fact, Committee Republicans released a set of CBDC principles, one of which emphasized the potential that stablecoins hold if issued under a clear regulatory framework.

“The Working Group report outlines a model that could be pursued. However, it does not take into account the full picture and the array of options available to us.

“So, let’s break this down. We know Democrats’ approach to financial services for the last decade or so, beginning with Dodd-Frank, has been to derisk banks

“And as you state in this report—and as I expect we’ll hear from my Democrat colleagues today—stablecoins are extremely risky. So, what’s your solution to mitigate this alleged risk? Make them all banks. Regulate them like banks.

“That doesn’t make any sense. Now, let me be clear, I’m not saying that there is zero risk. But Washington’s knee jerk reaction to regulate out of fear will not allow stablecoins to achieve their full potential. 

“This new technology, like all financial technology, deserves appropriate and thoughtful regulation.

 “The report also includes an analysis of the stablecoin market. Yet, in this analysis, there was absolutely no discussion of existing regulation for stablecoin issuers at the state level. 

 “These issuers are subject to a comprehensive supervision regime including reserve requirements, examinations, and compliance with anti-money laundering rules. 

“We should be examining all existing regulatory structures for best practices and taking advantage of the “lessons learned” from those operating on the forefront.

“Another critical component missing from this report was the potential benefits of stablecoins. 

“In this committee, we have witnessed the payments industry address shifts in customer demand and the never-ending race to move money faster and cheaper.

“Digital currencies like stablecoins are a natural continuation of the same issues we’ve addressed over the years.

“We cannot regulate out of the fear of the future. It is Congress’ role to seek solutions that directly address the risks at hand.

 “Requiring stablecoins to only be issued by banks would be a major obstacle for us continuing to foster innovation within this nascent industry.

“My friends across the aisle like to force new products into unfitting and often inappropriate existing regulatory structures.

“While I recognize the Working Group’s inclination to do so, I hope that today we can think bigger and comprehensively discuss the potential benefits of the increased use of stablecoins.

“The policies we develop must promote private sector innovation and foster competition to build a resilient product without creating risk in other areas.

“We should not, as this report does, limit our focus to only the risks. To do so would be shortsighted and not allow us to realize the potential that the digital ecosystem holds for consumers.

“I yield back.”

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