U.S is Too Slow In Its CBDC Development
Former Chairman of the CFTC Tim Massad, says that the USA’s efforts to enhance financial services and payment system through CBDC is inadequate, branding the country’s progress in its digitized currency development “too slow”. In an Economic Committee meeting held on Wednesday regarding the role of cryptocurrency, the ex chair who left the commission in 2017, said a CBDC could be one key thing that can upgrade the country’s current “ancient” and “expensive” payment system.
The ex CFTC chair, said that CBDCs and cryptos are generally seen as a way to attain financial inclusion, and that the country should consider the potentials of these for the greater good. Massad also said that while these fiat-backed assets could be utilized for cross-border payments, they are not without their issues in terms of regulations and pose great risks. He used the example of how users transacted in Tether in exchanges and even moved their funds in the coin as the reason the payment structure in the country needs to be altered to suit modern times.
Massad said that since reserves of stablecoins issuers are not invested in liquid assets, they can’t be backed in the same manner as funds in the conventional banking system. Finally, he recommends the country to use “bank-like” regulations for issuers of stablecoins.
Stablecoins Are Interesting, But Lack Regulatory Oversight
Peter Van Valkenburgh, who works at Coin Center, said that stablecoin is an interesting field in the cryptosphere, but lacks oversight for issuers. Valkenburgh, who was present at the meeting, said that the lack of strong laws gives issuers the room to violate. Although there are some that are regulated. He added that there’s the possibility of forming more federal regulations for stablecoins. Presently, there’s a legal divide in regulations.
Their comments come after a report from the US Treasury opined that there should be a regulatory oversight for issuers of stablecoins, similar to that employed in banks and depository entities. The report opined that Congress should act decisively to ensure that stablecoins have a federal oversight. However, it didn’t specify which of the government agencies should take up the responsibility of overseeing that these assets operate within the legal framework.
Some suggestions are floating around that the SEC and the CFTC should carry out the oversight since they have such power and are conversant with enforcing regulations on a broader scope. The report seemed to have caused a legislative rift between the two government regulatory households on who to oversee the industry. The group emphasized the need to have some form of regulations to address the challenges and risks posed by stablecoin payments. These fiat-backed assets are emerging, thus needing legislation.
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