Tim Massad was the chair of the Commodity Futures Trading Commission from 2017 to 2017. He said that the United States is far too slow in developing plans to modernize their payment systems.
Massad stated Wednesday that a central bank digital currency (or CBDC) could be used by the United States for improving its current payments systems. He also said that while they could be used, they presented significant challenges to U.S. regulators.
Massad stated that Tether (USDT), a stablecoin used to transfer funds between exchanges, is a great example of why the U.S. payments system must be modernized. He said that the reserves of the stablecoin issuer were not likely to be invested in “highly secure liquid assets” such as the dollar, and therefore not insured in the same manner as traditional financial institutions. Former CFTC chief said that he would recommend adopting “bank-like” regulations, but also preventing issuers making loans in order to eliminate the need to have deposit insurance.
Massad stated that CBDCs, stablecoins, and digital assets are frequently cited as ways to increase financial inclusion. We should also consider their potential for this purpose. “We must act immediately to increase access to financial services via other means — the need for this is too great.”
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Peter Van Valkenburgh from Coin Center, director of research, was also present at the hearing and called stablecoins “interesting” in crypto space, but expressed concern about the lack of regulatory clarity for issuers.
Van Valkenburgh stated that there are “certainly some stablecoin-issuers who are violating law,” and added:
“There are also stablecoin issuers that are regulated and there is the possibility of creating a federal home to regulate stablecoins. There is no legal gap, I believe — there is an enforcement gap.
Both Massad and Van Valkenburgh made these comments following a report by the President’s Working Group on Financial Markets, which suggested that U.S. stablecoin issuers should be subject to an “appropriate federal oversight”, similar to banks. According to the group, legislation is urgently required to address the prudential risk posed by payment stabilitycoin arrangements.