US Congress Accuses Fed of Creating Barriers to Stablecoins Issuance by Banks

A group of congressional members, led by the Chairman of the House Financial Services Committee Patrick McHenry, have written to the Federal Reserve System’s leader Jerome Powell expressing their concern that the recent moves from the Fed to increase oversight of banks’ cryptocurrency dealings will impede the progress of the bill to regulate stablecoins.

Bill Huizenga, and French Hill, both fellow Republican Party members, also signed the document. The Fed’s decision requires financial institutions to acquire written approval from the agency when dealing with dollar tokens and levies oversight bodies to assess institutes for compliance to US law regarding digital assets and blockchain technology.

Although the oversight process is presented as leadership by the Fed to ensure the safety and reliability of the banking system, the members of Congress assert that the Fed’s intention is to prevent stable payments from taking place, as it would evidently deter banks from participating in the digital asset ecosystem.