Scott Beck, the chief executive officer at United Texas Bank, asked members of the state’s blockchain working group for recommendations on policy to leave stablecoins to banks and not crypto firms.
Beck spoke before the Texas Work Group for Blockchain Matters in Austin Friday. He suggested that U.S. dollar-backed stabilitycoins should be limited to licensed banks and not issuers such as Circle. The CEO of United Texas Bank cited a November report by the President’s Working Group on Financial Markets in which they recommended that stablecoin issuers be held to the same standards and insured depository institutions, including federally chartered and state-chartered banks.
Beck stated that banks can issue and manage stablecoins if they are considered money. “Banks are able to handle money with the legal expertise they have, unlike the stablecoin actors of today. They are also highly regulated at the federal and state levels.
Stablecoins can be issued by banks, but non-banks cannot issue them. This will increase consumer protection and help to attract capital and resources to this area of economic activity.
United Texas Bank CEO speaks before the Work Group for Blockchain Matters at Texas Capitol on Friday
Robert Villasenor (working group member) asked Beck about his belief that stablecoin issuers such as Circle held assets at “other institutions” and that this was “effectively sucking deposits from the banking industry.” Knowing Your Customer rules would also be applied, he said.
Lee Bratcher is the president of Texas Blockchain Council. He was present at the hearing and challenged Beck’s proposal. The bank CEO countered by saying that one of the key differences among licensed banks and private companies issuing stabilizecoins, was that the money behind them would “sit at the Fed” and that the funds would be FDIC insured.
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Circle’s USDC-pegged stablecoin claims to be 100% backed with cash or cash equivalents. This includes bank deposits, Treasury bills and commercial paper. In March, the stablecoin issuer stated that BNY Mellon, a financial institution, would take custody of its USDC reserves. More than 52 billion coins were in circulation at the time of publication.
After the passage of House Bill1576, the Texas Work Group on Blockchain Matters officially was formed in September 2021. The group’s website states that its mission is to develop a framework for Texas’s blockchain industry expansion and recommend policies and investments by the state in relation to blockchain technology.