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Rep. McHenry Creates House Digital Assets/FinTech Subcommittee

 |  January 16, 2023

House Republicans are set to take a closer look at FinTechs and digital assets. Rep. Patrick McHenry, the new chair of the House Financial Services Committee, has created a new subcommittee devoted to digital assets, financial technology and inclusion, according to an announcement on the committee website.

The subcommittee’s jurisdiction will include setting “clear rules of the road among federal regulators for the digital asset ecosystem,” the announcement said.

In addition, it will also develop policies that help FinTechs reach underserved communities, while also strengthening “diversity and inclusion in the digital asset ecosystem.”

Related: Open Markets In The Era Of Fintech And Big Tech: Lessons For The Institutional Design Of Competition Policy

The new subcommittees come at the start of a year in which crypto companies and FinTechs should prepare themselves for more scrutiny, PYMNTS’ Karen Webster wrote recently.

“Legislators and regulators have approached regulation of crypto and FinTech tentatively, often believing claims that they shouldn’t do anything to jeopardize the innovations that are supposed to transform the world,” Webster wrote.

“They didn’t want to challenge visions expressed in language they couldn’t comprehend and were afraid to ask questions to further their understanding,” Webster said.

Then the FTX crypto exchange collapsed, putting more pressure on crypto companies and FinTechs to prove their legitimacy.

That pressure, Webster wrote, is going to shape the regulatory debate, which will likely end with the crypto sector facing tougher regulation than traditional banking, payments and finance.

FinTechs will be under the microscope as well, with the Consumer Finance Protection Bureau (CFPB) and Office of the Comptroller of the Currency taking a closer look at the requirements for what it takes to function as a bank and offer bank-like services.

Just before the GOP flipped the House year, McHenry, R-N.C., told PYMNTS that he planned to take a closer look at stablecoins.

“What we now have is a complicated policy,” he said in an interview with Webster, “and it’s a complicated legislative text — with compromises within … the nature of legislative compromise does not often create something of beauty. It creates something of practical consequence. And this is what I’m going for.”

At a high level, he said, stablecoins are necessary, and are more stable than bitcoin and other cryptocurrencies.

“But we don’t have a federal regulatory ‘form’ around it,” he told Webster, “or insight into the assets acting as backing.”