US Treasury’s Liang Offers Path for Nonbank Stablecoins

Nellie Liang, the U.S. Treasury Department’s undersecretary for domestic finance, thinks it would be OK for nonbanks to issue stablecoins, Coindesk reported Monday (July 18).

She explained that though President’s Working Group on Financial Markets recommended that stablecoins stay inside the regulated banking industry, Treasury doesn’t want to be “overly rigid” about how crypto firms would accomplish that.

“There’s some flexibility under that framework,” she told reporters at a Financial Services Forum event in Washington. “It’s meant to be open. It was not meant to limit to current banks.”

Treasury and regulators have said they want stablecoin issuers to be regulated for safety and soundness, she said, in the way regular banks are. But she said they shouldn’t have to have deposit insurance and could be subsidiaries or affiliates of bank holding companies. The idea was to bring it “into the banking system.”

According to the report, Liang has said issuers of the tokens shouldn’t just be monitored for the quality of their reserves. She says they need a new regulatory structure.

There are negotiations going on in Congress, though they are only in the early stages. One bill in the House Financial Services Committee has leaned toward new rules for both banks and neobanks.

See also: Lawmaker: Stablecoin Bill Could Bypass Regulators

PYMNTS also reported that lawmakers might overrule U.S. regulators’ desire for stablecoins to be governed by banks. Coindesk also wrote that Democrats have been writing rules for stablecoins which could be as strict as Treasury Department and financial regulators had wanted.

The bill might make a way for nonbank firms to become government-approved stablecoin issuers, according to U.S. Rep. Jim Himes, D-Conn., who is a senior member of the committee but not working on the legislation.

“Apparently, we’ll have options for both banks and non banks,” Himes said.

He added that Chairwoman Maxine Waters, D-Calif., and Rep. Patrick McHenry, R.-N.C., who is a top Republican for the committee, have been working on a narrower bill which would make “standards for reserves” for more than one kind of issuer.

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