'It's Easier To Operate': McClain Calls For Federal Stable Coin Regs To Create 'Level Playing Field'

2 days ago

During a House Financial Services Committee hearing prior to the Congressional recess, Rep. Lisa McClain (R-MI) questioned witnesses about the importance of federal stable coin regulations.

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Transcript

00:00Republican Conference, Ms. McClain,

00:01is recognized for five minutes.

00:03Thank you, Mr. Chair.

00:04And thank you all for being here today.

00:06I appreciate it.

00:07I want to start with Mr. Cascarilla.

00:09I want to understand and explore more.

00:12Many stable coin issuers, including Paxos,

00:14have set up operations in foreign jurisdictions.

00:19Why did you decide to make that decision to set

00:23up additional operations abroad?

00:25What was the thought process behind that?

00:28There's a number of different reasons.

00:29I think the first important one is those jurisdictions had a

00:33clear set of rules.

00:35You had the clarity, the consistency, and the certainty

00:37to be able to invest for a long period of time.

00:40We have operated out of Singapore for over 10 years.

00:44So we've been there for quite a long period of time.

00:45And the Monetary Authority

00:47of Singapore is a very credible regulator.

00:49At the same time, there wasn't a federal framework to be able

00:52to operate inside the U.S. And as well-intentioned

00:57as the New York Department

00:58of Financial Services has been, it's still a state regulator.

01:01And in order to be able to operate on a global basis,

01:04you need to be able to have, I think, a federal framework.

01:08And in your view, what would happen if we fail

01:12to enact a federal framework?

01:15Well, I think you're ceding leadership

01:18and potentially ceding the position of the dollar

01:21as a world reserve currency.

01:23Interesting.

01:24Mr. Coulson, how are small businesses

01:27and entrepreneurs using Stablecoin

01:31to facilitate more international operations?

01:35We sometimes discuss an idea at Stripe,

01:40the micro-multinational, in that, you know,

01:44if you employ 10,000 or 100,000 people, you know,

01:47it's possible to serve 100 markets or something like that.

01:51But as a much smaller business

01:53or a business just getting started,

01:55that's much more difficult.

01:56And so I think part of the promise of Stablecoins is

01:59that for those businesses that are just getting

02:01off the ground, it enables them to serve a global audience

02:04from day one, and that can multiply their market

02:07and thus their revenue quite significantly.

02:11Which is a good thing.

02:12Yeah. Ms. Butler, BNY is one of the world's largest custodians.

02:17It is essential that the reserve bank backing

02:21Stablecoins are secure and transparent.

02:24Can you describe how BNY Mellon keeps the Stablecoin reserves

02:29that it manages safe and that is fully able to meet all

02:35of the redemption requests at any time?

02:38Thank you very much, Congresswoman,

02:40for your question.

02:40So we are the custodian of the reserve.

02:42And as such, we apply longstanding custody practices

02:46around asset safety, so similar to what we do

02:49for the $52 trillion of assets we have under custody.

02:52We are not the reserve manager of the reserve itself

02:56that is held by either the Stablecoin issuer

02:59or a separate reserve manager.

03:02Okay. Is there a concern on meeting redemption requests

03:08or do you feel there's enough regulation around that

03:11and how the system is set up?

03:14So we support the proposals in the bill to make sure

03:17that there is the right safeguards

03:19on how you manage the reserves, what assets are in the reserves,

03:23how you disclose them, and ensuring

03:25that there is regular audits on those reserves.

03:28Transparency is good then.

03:29Yes, it's good.

03:31Mr. Goon, it is my understanding

03:33that Stable Act establishes a federal floor, right,

03:38of requirements that all payment Stablecoin issuers must meet

03:42in order to issue in the United States.

03:45So I think that floor is extremely important.

03:47Can you explain in layman's terms why it is important

03:50to ensure that regulatory framework

03:54for payment Stablecoin establishes a baseline

03:57across state and federal jurisdictions?

04:01Sure. So basically having a federal floor creates uniformity

04:05across the United States

04:06and across different Stablecoin issuers.

04:10I think that's important so that it will be easy to compare

04:13and say everybody is subject to the same standards.

04:16There could be some disuniformity,

04:19but only by increasing the standards from state to state.

04:24So it provides a level playing field.

04:26It's easier to operate, to do business, to figure out how

04:29to function if I'm a...

04:30Much easier to understand, too, and apply, yes.

04:33Okay. Thank you.

04:35And last question, if I can, Mr. Cacigarilla.

04:38There is a tremendous concern about the use

04:41of digital assets in money laundering.

04:45How can Stablecoins be used

04:47to reduce illicit financial transactions,

04:50and what protections are included in the Stablecoin Act

04:54to inhibit nefarious financial actors?

04:59And that's to keep out the bad actors.

05:01Yeah, I'll try to be fast.

05:02There are requirements for AML, KYC, and BSA, and then secondly,

05:07because it's on a blockchain, it's a forever ledger.

05:09You're always able to track movements,

05:11and so you can now use different tools to be able

05:13to understand how illicit activity is happening.

05:15Very good.

05:16With that, I'm over time.

05:17Thank you, Mr. Chairman.

05:18I yield back.

'It's Easier To Operate': McClain Calls For Federal Stable Coin Regs To Create 'Level Playing Field'

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