Lawmakers from both sides of the aisle are expressing concerns about stablecoin legislation that is set to pass the House Financial Services Committee. There are fears that this legislation could potentially open the door for tech giants, including Elon Musk, to issue their own stablecoins.
Stablecoins are a type of cryptocurrency designed to maintain a stable value relative to the US dollar. They are commonly used by crypto traders to store funds that are not invested in other digital assets. Additionally, there is growing belief among crypto advocates that stablecoins will become a popular method of online payment.
During a markup of the bill on Thursday, California’s Rep. Maxine Waters, the ranking Democrat on the committee, highlighted a particular “concern” with the legislation. She pointed out that it could allow Elon Musk’s “Twitter X” to become a global payments provider through the issuance of a stablecoin, directly or indirectly. This possibility was described as a “frightening proposition.”
In addition to Democrats, some Republicans also voiced their concerns regarding the bill. They argued that it does not sufficiently prevent large tech companies from becoming stablecoin issuers.
Rep. Ralph Norman of South Carolina, a Republican, emphasized that the current bill does not contain a prohibition on commercial entities. As a result, he warned that companies like Facebook and Amazon could potentially become dominant stablecoin issuers, further exerting control over people’s lives.
The Controversy Surrounding Mark Zuckerberg and Stablecoin Regulation
Norman drew attention to the ongoing efforts by Republicans to hold Meta CEO Mark Zuckerberg in contempt for his failure to produce documents related to an investigation into alleged censorship on his company’s platforms. This comes as Republicans raise concerns about the implications of granting Zuckerberg free reign in an unregulated marketplace, where he would have a competitive advantage over credit unions and community banks.
In a 2021 report on stablecoins, the Biden administration recommended that Congress pass a regulation law to control the activities of stablecoin issuers and limit their affiliations with commercial entities. This proposal aims to address concerns surrounding the concentration of economic power and the potential for systemic risks associated with stablecoins.
The White House is also in favor of a law that would restrict stablecoin issuance to federally regulated banks. This move seeks to establish a more secure and regulated framework for stablecoin operations.
In related news, there have been reports that Elon Musk’s Twitter, now rebranded as X, is exploring opportunities to incorporate payment services into the social network. This development highlights the growing interest in merging social media and financial transactions.
As for the stablecoin bill, which aims to enhance federal oversight of cryptocurrencies, it is expected to pass committee voting. However, its destiny within the broader House and Senate remains uncertain.