Lawmakers on both sides of the aisle expressed fears that stablecoin legislation set to pass the House Financial Services Committee Thursday could open the door to tech titans, including Elon Musk, to issue their own stablecoins.
Stablecoins are a type of cryptocurrency that seeks to maintain a stable value relative to the dollar, and are often used by crypto traders to park funds not invested in other digital assets. Crypto advocates also predict that stablecoins will become a popular means of payment on the internet.
Read more: House Financial Services Chair McHenry blames Biden administration for sinking stablecoin bill
California’s Rep. Maxine Waters, the committee’s ranking Democrat said during a markup of the bill Thursday that a “concern” with the legislation would be that it could open the door to Elon Musk’s “Twitter X to establish itself as a global payments provider via the issuance, directly or indirectly, of a stablecoin,” a scenario she called “a frightening proposition.”
Some Republicans also expressed concern that the bill doesn’t do enough to prohibit large tech companies from their own stablecoins.
“Right now this bill contains no commercial entity prohibition,” said Rep. Ralph Norman of South Carolina, a Republican. “This means that the large tech companies like Facebook, like retail companies like Amazon, could become a stable coin issuer and further dominate our lives.”
Norman mentioned the current efforts by Republicans to hold Meta
META,
CEO Mark Zuckerberg in contempt for failing to produce documents for an investigation into alleged censorship on his companies’ platforms.
“To my Republican colleagues, we are currently in the midst of holding Mark Zuckerberg in contempt of Congress while simultaneously in this bill, handing him the keys to an unregulated marketplace, where he will have competitive advantage against credit unions and community banks.”
A 2021 report on stablecoins issued by the Biden administration recommended Congress pass a stablecoin regulation law that limits a stablecoin issuer’s affiliation with commercial entities in order “to address concerns about systemic risk concentration of economic power.”
The White House would also prefer to see a law that restricts stablecoin issuance to federally regulated banks.
The debate follows reports that Elon Musk’s Twitter, which recently rebranded as X, has been pursuing plans and regulatory licenses to incorporate payments into the social network.
See also: Zuck beats Musk at his own game with Meta’s year of efficiency
The stablecoin bill, which would strengthen federal oversight of these cryptocurrencies, is expected to be voted out of committee, but its fate in the broader House and Senate is uncertain.
This post was originally published on Market Watch
