Congress Questions Fed's Bowman on Stablecoin Regulations
Congressman Stephen Lynch interrogated Federal Reserve Vice Chair Michelle Bowman regarding her perspectives on digital assets during a recent hearing, revealing points of confusion about stablecoin definitions.
US Representative Stephen Lynch questioned Federal Reserve Vice Chair Michelle Bowman on Tuesday regarding her past statements urging banks to fully engage with digital assets, highlighting ambiguity surrounding the definition of stablecoins.
During an oversight hearing, Lynch inquired about Bowman’s comments from the Santander International Banking Conference held in Madrid last November. He noted that Bowman had advocated for banks to “engage fully” with digital assets.
However, Bowman clarified in her conference remarks that she referred to “digital assets” more broadly, not exclusively to cryptocurrencies. The discussion evolved as Lynch sought clarification on the differences between digital assets and stablecoins.
Bowman indicated that Congress had authorized the Fed—through the GENIUS Act, which is designed to regulate payment stablecoins—to investigate a regulatory framework for digital assets.
“The GENIUS Act mandates us to establish regulations to facilitate these activities,” said Bowman.
Representative Stephen Lynch at the hearing. Source: House Financial Services Committee
While many cryptocurrencies are known for their volatility, stablecoins, particularly those pegged to the US dollar, usually maintain a stable value. Despite some notable exceptions where certain coins have diverged from their pegs, like the collapse of Terra’s algorithmic stablecoin in 2022, the vast majority of stablecoins exhibit minimal fluctuation from their target.
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Bowman had mentioned in August the necessity for Fed staff to hold small amounts of crypto or similar digital assets to foster a better understanding of the technology.
FDIC Acting Chair Predicts Stablecoin Framework Soon
Also present at the Tuesday hearing was Travis Hill, acting chair of the Federal Deposit Insurance Corporation. Hill mentioned that the FDIC expects to introduce a stablecoin framework shortly, detailing requirements for issuer supervision.
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