SEC vs CFTC Turf War 'Unhelpful' and 'Unsustainable': House Subcommittee Chair

The newly formed House Subcommittee on Digital Assets gathered Wednesday to hear from financial experts and members of the crypto industry to discuss stablecoin regulation.

The hearing, entitled “Understanding Stablecoins’ Role in Payments and the Need for Legislation,” kicked off with prepared remarks from Subcommittee Chair Rep. French Hill, R-Ark.

“The ongoing turf war between the SEC and the CFTC over digital assets is also just unhelpful, but it’s also unsustainable,” Hill said during the hearing. “When we have two agencies contradicting each other about whether one of the most utilized stable coins in the market is a security or a commodity, we end up with uncertainty.”

Legislators asked about recent bank collapses, namely Signature and Silvergate Banks’ closures, and how recent depegging incidents impact the crypto industry and broader financial system.

The hearing comes one day after the House Financial Services Committee gathered for their “annual” oversight hearing with SEC Chair Gary Gensler. During Tuesday’s hearing, Rep. Hill raised the President’s Working Group on Financial Markets’s report in reference to stablecoins. Gensler said he supports Congress’s efforts to draft legislation on stablecoins, “with the guardrails of not undermining the $100 trillion dollar capital markets.”

Gensler also strongly implied that the recent bank failures were linked to their dealings with the crypto industry. But in Wednesday’s hearing, witness Adrienne A. Harris, superintendent of the New York State Department of Financial Services, dispatched that notion with regard to Signature, a New York bank.

“It is a misnomer that the failure of Signature Bank was related to crypto,” Harris said during the hearing, in response to a question from Rep. Maxine Waters, D-Cali., about crypto’s role in the banking crisis.

Deposits in the bank were from a large variety of a depositor base, Harris noted, reaffirming that crypto did not play a role in the runs on the bank. While 20% of Signature’s depositor base was crypto-related, the vast majority were from other industries, Harris added.

Upcoming legislation

Subcommittee members largely agreed stablecoin regulation needs to be passed quickly, but there is partisan disagreement about what legislation should proceed.

The current draft bill released last week “in no way recommends the final work on stablecoins by negotiations between the two of us,” Waters said, referring to unresolved conversations with Subcommittee Chair Hill.

Hill responded by saying he welcomes collaboration on the bill and stablecoin framework.

Other hearing witnesses included Dante Disparte, chief strategy officer and head of global policy at Circle; Austin Campbell, adjunct assistant professor of business at Columbia Business School; Jake Chervinsky, chief policy officer of the Blockchain Association; and Delicia Reynolds Hand, director of financial fairness at Consumer Reports.

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