Senate Tackles Stablecoins in Banking Committee Hearing Today

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On the heels of an informative and productive House Finance Committee hearing last week, some experts predict today's Senate session could get ugly.

Key points

  • Sen. Sherrod Brown (D-OH) chairs the Senate's Banking, Housing and Urban Affairs Committee -- he arranged this hearing that will focus on stablecoins.
  • Less than seven days ago the House Finance Committee held a similar meetup, which was widely lauded as helpful and instructive.
  • Political experts predict today's session will likely see bipartisan sparks fly since any future Congressional legislation has to have Sen. Brown's support and pass through his committee.

Today, the U.S. Senate's Banking, Housing and Urban Affairs Committee is holding a hearing that will focus primarily on stablecoins and possibly the entire cryptocurrency space. The session has been arranged by Sen. Sherrod Brown (D-OH) who chairs the banking committee.

Senate banking committee seeks stablecoin insights

Sen. Brown’s hearing, titled "Stablecoins: How do they work, how are they used, and what are their risks?", will be streamed on the senate's website and video archived later today. This banking committee blitzkrieg is happening within four working days of the House Committee on Financial Services' own cryptocurrency hearing last Wednesday.

Senate hearing expected to be fiery

The House's nearly five-hour marathon meeting was very productive and constructive according to nearly all speakers and attendees. However, some experts think the Senate session will be much more adversarial than the House hearing. Jaret Seiberg, managing director and financial analyst at Cowen Washington Research Group said in a televised interview that he expects fireworks in the Senate chambers.

"It's going to be a lot more contentious. I mean, the House hearing, there were a lot of witnesses. There were a lot of members -- it went on for five hours. Senate Banking is going to be much more concise. You have two crypto critics who are testifying. And I expect a lot of punches to be thrown."

Senate will have final say on setting crypto laws

Seiberg went on to say that it will ultimately be the Senate that will dictate the specifics regarding any crypto legislation that could be passed -- not the House of Representatives.

"The House can pass as many crypto-related bills as it wants, but if Sherrod Brown doesn't become a champion of crypto legislation, it's simply not going to become law. And this is our best indicator that we've had in the last 12 months as to what he's going to do."

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As of this writing, there are currently only two confirmed witnesses who will testify before Sen. Brown's Committee, but more could be added. Neither of the registered participants are crypto supporters:

  • Professor Hilary J. Allen, American University Washington College of Law
  • Alexis Goldstein, director of financial policy at the Open Markets Institute

Activeness doesn't equal effectiveness

It's worth noting that even though stablecoins will be the focus of today's meeting, stablecoins were originally wrangled by the President's Working Group (PWG) in midsummer. But after three months of inaction, the PWG failed to provide any new insights. It rather rested on repeated past remarks that stablecoins have a lot of utility for consumers but require regulatory oversight.

While most reasonable people agree with that need, the only recommendation from the PWG was to punt stablecoins over to Congress and let those lawmakers figure it out. With two banking committee hearings in less than seven days, congressional policymakers seem to be very active about crypto, but not necessarily effective at this point.

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