A recent letter addressed to Federal Reserve Chairman Jerome Powell suggests that the Federal Reserve may be interfering with the congressional process of regulating stablecoins. The letter was authored by Patrick McHenry, the Chairman of the US House Financial Services Committee, and subcommittee chairs F rench Hill and Bill Huizenga.
The lawmakers expressed their concerns about two specific letters issued by the Federal Reserve: SR 23-7, focusing on the Regulatory Program for Novel Activities, and SR 23-8, titled “Regulatory No-Objection Procedures for Member Banks Seeking to Engage in Certain Activities Involving US Dollar Tokens.” They asserted that these letters could hinder the progress made by Congress in establishing a regulatory framework for payment stablecoins and potentially prevent financial institutions from participating in the digital asset ecosystem.
The lawmakers highlighted that these letters, alongside the January policy statement, impose additional limitations on cryptocurrency asset activities and effectively discourage banks from issuing or participating in payment stablecoins. They argued that while doing so, the guidelines for this process were not made clear. The January policy had extended the restrictions placed on national banks by the Office of the Comptroller of the Currency (OCC) to state-owned banks.
The letter also claimed that the Federal Reserve failed to comply with the Administrative Procedure Act's notice and comment procedures when issuing the letters in question. The lawmakers referred to the Payments Stablecoin Clarification Act of 2023, introduced by Patrick McHenry on July 20, as the legislation relevant to this matter.
In addition to expressing their concerns, the lawmakers listed eight specific issues that pertain to the implementation of the Federal Reserve's guidance in the two letters. They requested records to establish a clear timeline of events leading to the drafting of these letters.
