WASHINGTON — Stablecoins have the potential to upend the payments sector, and the lack of a federal payments regulator makes it harder to tackle the problem, a top Treasury Department official says.
Nellie Liang, the Treasury’s under secretary for domestic finance, said at an event hosted by the Financial Services Forum that payments are one of the first issues the department plans on tackling in a list of reports mandated by the Biden administration’s executive order to study and recommend policy around digital assets.
“Digital assets have the potential to really fundamentally reform payments," she said.
The issue of payments is among the topics under consideration by the Treasury and some lawmakers in Congress as policymakers try to figure out how digital assets will be overseen, and hints at the importance that payments will play in ongoing discussions.
The Treasury Department last week solicited public comment on the risks and opportunities posed by digital assets — a wide-ranging request that’s part of the Biden administration executive order to study the topic.
Liang continued to argue for Congress to
Because of the operational difficulties relating to stablecoins' potential use in payments, Liang said, the current regulatory setup isn’t “sufficient,” and that’s “in part because the U.S. does not have a federal payments regulator.”
“We want to make sure if it becomes a source of payment in the real economy, to support the real economy, that you can actually regulate the whole system,” Liang told reporters after her appearance. “The current banking system regulation wouldn’t have allowed that.”
Liang also clarified that the Biden administration’s calls for banklike regulation for stablecoin issuers wouldn’t necessarily mean that banks would be the only entities allowed to issue stablecoins. But she did say that banks could offer stablecoins, or some kind of deposits that are like stablecoins, in the future.
“I think the goal of any legislation would be to allow both banks and nonbanks to offer — or new nonbank payment kind of entities — to offer this service,” she said.
The pressure for lawmakers and regulators to respond to the recent crypto market meltdown has grown, though both the legislative and executive branches have
Along with digital assets, Liang addressed a range of issues, including climate risk in the financial system. She said that the Treasury, through the Financial Stability Oversight Council, has issued reports considering climate change as a financial stability issue, and said that the financial sector has a role to play in reaching certain climate goals, but stressed that it’s not something the banking or financial industries can tackle on their own.
“It’s not something the financial sector can take on its own,” she said. “But it’s really important that they contribute to this.”
