Stablecoin Risk Sparks Renewed Legislative Interest

Today’s Senate Banking Committee hearing with Secretary Yellen renewed calls for federal legislation based on recent algo-coin losses and resulting digital-currency market volatility. Chairman Brown (D-OH) and Ranking Member Toomey (R-PA) each noted the need for digital-asset legislation, with Mr. Toomey eliciting a commitment from Ms. Yellen to work with him to advance a measure, albeit without any specifics. We will await Thursday’s HSFC hearing before forecasting the prospects for stablecoin legislation in the relatively short time remaining in this session, with this report assessing the details of today’s discussion, as well as the Secretary’s very cautious approach to renewing SIFI designation while under fire from Sen. Warren (D-MA). As anticipated, the hearing also ventured into non-FSOC issues such as inflation and tackled one issue we did not predict – abortion’s economic impact – ahead of voting later today in the Senate on this contentious question.