US is not moving fast enough to develop its own CBDC
Tim Massad, who served as chairman of the Commodity Futures Trading Commission until 2017, said the United States is too slow to develop a plan to modernize its payment methods – CBDC.
In a hearing at the Joint Economic Committee on the role of digital assets in government which took place on Wednesday, Massad said a central bank digital currency, or CBDC, could be a solution for the United States to improve its existing payment systems, that he called “slow” and “expensive.” In addition, the former CFTC chairman said that while stable currencies could be used for this purpose, they also present some of the most pressing challenges for U.S. regulators and pose significant risks.
Massad explained that there are a lot of people who use stable cryptocurrencies like Tether (USDT) to move funds between exchanges and that they are a good example of why the US payment system needs to be modernized.
CBDC
However, he also pointed out that USDT issuer’s reserves were probably not invested in “highly safe liquid assets” such as the dollar and were therefore not secured in the same way as funds in traditional financial institutions. The former CFTC chief said his recommendation would be to adopt “bank-like” regulations, but also to prevent issuers from making loans in an attempt to take away the need for deposit insurance.
“CBDCs, stablecoins, and digital assets generally are often cited as a means to achieve greater financial inclusion, and we should consider their potential for doing so,” said Massad. “We should act now to improve access to financial services through other means as well — the need is too great.”
Coin Center research director Peter Van Valkenburgh, who was also present at the hearing, called stablecoins an “interesting area” in the crypto space, but expressed concern about the apparent lack of clarity in regulations for issuers.
“There are certainly some stablecoin issuers who are violating the law”
“There are also regulated stablecoin issuers and there is also the possibility of creating more of a federal home for regulation of stablecoins. We don’t have a legal gap there, I think — we just have an enforcement gap.”
Comments from both Van Valkenburgh and Massad follow a report by the President’s Working Group on Financial Markets suggesting that US stable currency issuers should be subject to “appropriate federal oversight” similar to that of banks. The group said the legislation was “urgently needed to comprehensively address the prudential risks posed by payment stablecoin arrangements.”
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