Politics Blocked Meaningful Discussion in Senate Banking Hearing on Stablecoins

On Tuesday, the Senate’s Banking, Housing, and Urban Affairs Committee discussion was polite but divided regarding the topic of stablecoins and the cryptocurrency industry in general. Sen. Sherrod Brown (D-OH), who chairs the banking committee, arranged for the session and took the first shot against stablecoins in his opening remarks. 

"Let's be clear about one thing -- if you put your money in stablecoins, there's no guarantee you're going to get it back,"

said Sen. Brown.

"And if there's no guarantee you'll get your money back, that's not a currency with a fixed value -- it's gambling. Stablecoins, crypto markets aren't actually an alternative to our banking system, it's a mirror to the same broken system with even less accountability and no rules at all."

At the other end of the political debate, minority leader on the committee Sen. Patrick Toomey (R-PA) presented a framework for regulating stablecoins, lauding their benefits and usability — particularly for small businesses, which employ nearly half of U.S. workers. 

"Stablecoins are beginning to be used for small businesses payments and international remittances. While traditional payment systems can be expensive and take several days to settle, transferring funds via stablecoins is low cost and nearly instantaneous,"

said Toomey.

As expected, the bulk of the dialogue among committee members followed party lines. There were also four witnesses from academia and industry who ended up providing expert testimony during the hearing and answering questions from the senators.

• Ms. Alexis Goldstein, director of financial policy, Open Markets Institute
• Ms. Jai Massari, Partner — Davis Polk & Wardwell, LLP
• Mr. Dante Disparte, chief strategy officer and head of global policy, Circle
• Professor Hilary J. Allen — American University Washington College of Law

On the Flipside:

• Tuesday’s Senate’s Banking, Housing and Urban Affairs Committee hearing on stablecoins played out as expected, showcasing rhetoric from condemning Dems and commending Republicans.
• That outcome is much different than last week’s House Finance Committee hearing – suggesting that cryptos may be lined up as yet another political punching bag instead of a tool toward economic equality.

Why You Should Care:

While no decisive action came out of the Senate’s session — same as with the House Finance Committee hearing — it’s clear that congressional conversations will be ongoing.