Sen Toomey Criticizes Biden Administration’s Stablecoin Report

The Biden administration recently released its long-awaited stablecoin report – and one government official isn’t entirely on board. Pat Toomey – Republican Senator and ranking member of the Senate Banking Committee –disagrees with treating stablecoins issuers as banks. Amid a booming crypto market and allegations against Tether, he adds fuels the fire surrounding crypto regulations.

Toomey: Stablecoin Issuers Aren’t Banks

Pat Toomey shared his thoughts on the report in an interview with Yahoo Finance earlier today. The Senator acknowledged that congress should take action in the cryptocurrency space. After all, the digital assets do not fit well within the existing legal framework, given their novelty.

However, the senator disagrees with the report beyond that point, regarding its specifics:

“It is not at all obvious to me that the optimal outcome is to treat all stablecoin issuers as though they’re banks, or force them to become banks. I can see an argument for that, but I can see arguments for treating stablecoin issuers very differently as well.”

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Pat Toomey. Source: Time

The report that Gary Gensler unveiled last week  suggested that depository institutions should insure stablecoin issuers. This should help prevent “bank runs” on stablecoin institutions. Such fears may have justification considering the ongoing mystery surrounding Tether and its reserves.

Toomey believes that there should be more time for public input and political debate on the appropriate treatment of stablecoins. Personally, he said he hasn’t come to a final conclusion on what it should look like. However, he sees the dangers of large banks receiving an unfair advantage under the administration’s recommended solution. It could also stifle innovation in the stablecoin space.

Senator Toomey: Aiding The Crypto Industry

Ultimately, Toomey wishes for more thoughtful consideration before taking reckless regulatory action out of fear of the “systemic risks” stablecoins pose. OCC chief Michael Hsu has expressed fear of this exact scenario taking place.

“When I read through the report, it does kind of have the feel of a report issued by bankers, or by people who have a very bank-centric mindset, and I think we should not automatically go down that road,” said Toomey.

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The senator has a history of airing on the side of the crypto industry whenever the government makes things difficult for it. In September, he sent a letter to SEC chair Gary Gensler, looking for direct answers to several regulatory questions.

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