U.S. Senator Roots For Stablecoins’ Transparency and Cash Backing

A vocal Pro-Crypto U.S Senator has called for further developments in the auditing of Stablecoins. Sen. Cynthia Lummis holds that the audit should go beyond the “proof” provided by the leading insurers.

Senator said, “cash should fully back Stablecoins”. But, again, there’s a need to audit that condition regularly to ensure compliance by their providers. Lummis contributed to a Senate discussion on the potential for the U.S to develop. Its central bank digital currency (CBDC). She sounded alarmed over the lack of transparency in Stablecoin backing. Her sentiments echo those of many crypto lovers.

Making Full Audits

Circle and Tether – have recently revealed that several assets back their products. These include cash-like products and short-term securities. Again, there are commercial papers.

Tether suggests that up to half of its reserves are in commercial paper. On the other hand, Circle says its resources are mainly in cash and money market funds. Also, their revelations fall short of a full audit. Furthermore, third-party auditors verify the information that the insurer has provided them. In conclusion, the full audit that Lummis is pushing for would be groundbreaking.

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Lummis joins other crypto-friendly lawmakers who’ve expressed concerns about stablecoins. For example, Rep. Warren Davidson (R-Ohio) thinks that stablecoins could be considered securities. As a result, they could be subject to the U.S. Securities and Exchange Commission (SEC) regulation.

Many are looking forward to the publication of a Treasury Department’s report on stablecoins. Also, their expectations are that the department will make it public.

Project Hamilton

The Senator weighed in on the principles she feels should guide the U.S in developing its CBDC. She stated that “the development of the digital dollar, whose research is dubbed “Project Hamilton ought to be driven by legitimate needs”

Furthermore, such a program should consider the dollar’s role in attaining financial inclusion. And, the development should assess the currency’s programmability and curb risks.

Lummis reiterated that Americans deserve confidence. The government won’t use the CBDC to spy on them. Pointing to China’s CBDC, she said that the nation wouldn’t allow the digital dollar to be a panopticon.

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Lastly, Lummis’ remarks follow Federal Reserve Chairman Jerome Powell’s call on Congress to pass legislation. They are allowing the Fed to pursue creating a digital dollar.