Scott Beck, chief executive officer, United Texas Bank, has asked members of the state’s blockchain working group to recommend policy for leaving stablecoins to banks rather than cryptocurrency firms, as reported by Cointelegraph.
On the basis of information by Cointelegraph, speaking in front of the Texas Work Group on blockchain matter in Austin, Beck made suggestions regarding limiting the issuance of US Dollar backed stablecoins to licensed banks rather than issuers such as Circle. Beck focused on a November report from the president’s working group based on financial markets, in which the group spoke about stablecoin users and how they should be held accountable as insured depository institutions including state and federally chartered banks. “If such stablecoins are defined to be ‘money’, banks are the economic actor to issue and manage stablecoins. Banks have the expertise and legal framework for handling money, and unlike today’s stablecoin actors, banks are regulated at both the state and federal level,” Beck said.
According to Cointelegraph, to answer the question from working group member Robert Villasenor, general counsel, MoneyGram, Beck stated that stablecoin issuers were keeping assets at other institutions in contrast to banks. He further mentioned about how certain stablecoins were particularly vulnerable to runs, potentially threatening the economy should the market reach a certain level, and leaving the issuance to banks ensured Know Your Customer (KYC) rules would be followed. Lee Bratcher, president, Texas Blockchain Council, claimed Beck’s proposal to be anti-competitive.
Moreover, Cointelegraph mentioned about Circle’s USDC dollar-pegged stablecoin being 100% backed by cash or cash equivalents, including bank deposits, treasury bills, or commercial papers. The stablecoin issuer made an announcement in March that financial institution BNY Mellon would take responsibility for custodying its USDC reserves, as more than 52 billion coins were in circulation at the time of this publication.
(With insights from Cointelegraph)
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