According to CoinDesk, U.S. Treasury Secretary Janet Yellen stated in a testimony before the House Financial Services Committee that the government's financial risk watchdogs want a minimum level of federal oversight for stablecoin issuers. This would establish universal compliance standards beyond what states like New York and Texas currently impose. Yellen emphasized the importance of a federal regulatory floor that would apply to all states, with a federal regulator having the authority to decide if a stablecoin issuer should be barred from issuing such an asset.
The issue of federal authority has been a primary sticking point in U.S. legislation on regulating stablecoins, with Republicans advocating for more authority for state regulators and Democratic lawmakers, along with Yellen's Department of the Treasury, supporting federal authority. Yellen also addressed the U.S. Securities and Exchange Commission's proposal to further restrict how investment firms custody their client's assets, including crypto holdings. The proposed rule, which is on the agency's agenda to complete this year, would require a wider range of client assets to be held with "qualified custodians" and has drawn criticism from bankers, some lawmakers, and other regulators about its potential effects. The Financial Stability Oversight Council has warned Congress and the crypto industry that if lawmakers cannot mandate new regulations for digital assets, the council may be forced to act on its own, potentially imposing Federal Reserve oversight on aspects of the industry.