Chief executive officer of United Texas Bank, Scott Beck, has asked members of the state’s blockchain working group to propose a policy for letting banks supervise stablecoins instead of the crypto firms.
On Friday, August 19, Beck recommended to the Texas Work Group on Blockchain Matters in Austin, that the issuance of stablecoins, backed by U.S dollar, to licensed banks instead of stablecoin issuers such as Circle. The CEO also cited a November report from the President’s Working Group on Financial Markets. The group had mentioned in the report that stablecoin issues should be treated just like insured depository institutions including federally and state chartered banks.
According to Beck, banks are the proper economic entities that should issue and manage stablecoins, if such stablecoins are referred to as ‘money.’ Banks are equipped with legal frameworks and expertise to handle money. Moreover, banks are highly regulated at both the federal and state level.
Beck believes that introducing stablecoin activities into the banking field and prohibiting non-banks from the issuance of stablecoins will improve consumer protection. And, this action will also lure additional resources and capital to this emerging area of economic activity.
Beck’s Proposal is “Anti-Competitive”?
Beck, while answering questions from MoneyGram general counsel and working group member, Robert Villaseñor, alleged stablecoin issuers such as Circle of holding assets at “other institutions” as opposed to banks. Hence, draining deposits from the banking system. He also pointed out that some stablecoins are a threat to the economy and push to become a certain size, as they are vulnerable to run. While Know Your Customer rules are bound to be followed when the issuance is left to the banks.
Meanwhile, the president of the Texas Blockchain Council, Lee Bratcher, who was also attending the hearing, called Beck’s recommendation as “anti-competitive.” The official highlighted the difference between private companies issuing stablecoins and licensed banks, saying that the latter would ensure that the cash backing the token continued to stay at the FDIC, and at the same time ensuring that they remain FDIC insured.
Source: https://www.thecoinrepublic.com/2022/08/20/united-texas-bank-ceo-suggests-granting-the-issuance-of-us-dollar-backed-stablecoins-to-banks/