Former United States Senator Pat Toomey believes there are several unanswered questions regarding stablecoin issuers and their underlying assets that must be resolved before comprehensive stablecoin regulations are passed in the US.
In an interview with Cointelegraph’s Turner Wright, the former Pennsylvania Senator cited bankruptcy resolution for failing stablecoin firms, reserve requirements, insurance on bank deposits, and regulatory jurisdiction as key areas of concern. Toomey voiced his concerns — particularly with potential oversight from the Federal Reserve:
"I think the Fed is fundamentally not friendly to this technology, so I believe there was never an imminent opportunity to get a bill done. Understandably, some of these difficult and somewhat complicated issues haven't been fully developed."
However, the former Senator expressed confidence that the political will to establish stablecoin regulatory clarity was strong.
Toomey told Cointelegraph that lawmakers will likely make progress on the issue beginning in 2025 after primary concerns — such as administration appointments and budget issues are resolved.
Toomey, pictured right, speaking at the North American Blockchain Summit. Source: Turner Wright/Cointelegraph
Calls for clear stablecoin regulation grow
Several pieces of key crypto legislation will be considered in the upcoming Congressional term, including Senator Bill Hagerty’s Clarity for Payment Stablecoins Act.
The bill introduced provisions to regulate stablecoin issuers with less than a $10 million market capitalization at the state level, as opposed to subjecting them to federal oversight.
Industry thought leaders continue to call out the current lack of comprehensive stablecoin policy as a major issue.
Chris Dixon, an executive for the a16z venture capital firm, took the stage at the Permissionless III event in October to warn the industry that a comprehensive stablecoin framework is needed to avoid a potential FTX-style collapse.
This hypothetical black swan event has the potential to ripple beyond the crypto industry and into macroeconomic territory, as stablecoin issuers continue to boost demand for Treasury Bills and other government securities by using these instruments to overcollateralize their tokenized fiat equivalents.
In an Oct. 29 meeting, the US Treasury’s Borrowing Advisory Committee noted the “modest,” yet growing, influence of stablecoin issuers on Treasury Bill demand. One member of the Committee even recommended establishing a private, permissioned blockchain to service the growing demand.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom