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What happened? The head of United Texas Bank, Scott Beck, proposed allowing only licensed banks to issue U.S. dollar-backed stablecoins, not issuers like Circle. Beck spoke to the Texas Blockchain Working Group and recalled that stablecoin issuers must meet the same standards as insured depository institutions, including state and federal banks. It is reported by Cointelegraph.
Information on the Cointelegraph website
What else is Beck talking about? According to him, if stablecoins are considered “money”, then banks are the proper economic entities for their issuance and management. Beck believes that banks have the experience and legal framework to work with money, and unlike today’s stablecoin market participants, banks are heavily regulated at the state and state level. He added:
“Introducing stablecoins into the banking sector and banning their issuance to non-banking institutions will increase consumer protection and attract additional resources and capital to this emerging area of economic activity.”
Responding to questions from MoneyGram working group member and general counsel Robert Villaseñor, Beck said stablecoin issuers like Circle hold assets in “other institutions” as opposed to banks, “effectively sucking deposits out of the banking industry.” He added that some stablecoins are particularly vulnerable and potentially threaten the economy, and the transfer of the issue to banks guarantees compliance with the rules of “Know Your Customer” (KYC).
The president of the Texas Blockchain Group, Lee Brattcher, challenged Beck’s proposal as “anti-competitive.” The head of the bank noted that one of the key differences between licensed banks and private companies issuing stablecoins is that in the first case, the funds behind the tokens will “remain in the Fed”, which also ensures that the funds will be insured by the Federal Deposit Insurance Corporation (FDIC).
Circle’s USD Coin (USDC) is pegged to the dollar and backed by cash or cash equivalents, including bank deposits, Treasury bills or commercial paper. In March, Circle announced that BNY Mellon would be responsible for holding USDC reserves. The asset is on the 4th line in the list of cryptocurrencies by market capitalization with an indicator of 52.45 billion dollars.
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