A Former CFTC Chair Thinks There is No Need For New Laws on Stablecoins: Here’s What He Said
Timothy Massad, former chairman of the Commodity Futures Trading Commission (CFTC) and a current research fellow at Harvard's Kennedy School of Government, argued that regulatory progress on stablecoins can be made immediately by utilizing the current laws.
Guesting on Bloomberg's Odd Lots podcast, Massad discussed a stablecoin proposal he co-authored with two law professors, Howell Jackson and Dan Awrey, stating that they are "not sure [legislation] will happen," and if it does, there is a question of how comprehensive it would be.
"So what we're saying is financial regulators today have the authorities they need to create a framework to try to bring this activity within the banking perimeter," he said. "Wouldn't be regulated exactly as a bank, but what you would do technically is you set up what's called a national trust bank, which then has a trust below it that is the payment vehicle."
This would then enable supervision by a banking regulator, but done in a way where there's no deposit insurance, he added. The stablecoin issuer should just hold cash and Treasuries and "so forth." This could be coupled with access to a Federal Reserve master account, which would be useful for "settlement efficiency."
Furthermore, the Office of the Controller of the Currency could set various other standards, such as operational resiliency, basic consumer disclosure, consumer protection, etc., Massad said, adding:
But the point is that administratively, this could be done. It would require all the bank regulators to get together and cooperate something that doesn't always happen in our system very well. But it could be done today under existing law. And again, we're not against legislation. That would be fine, but let's not wait around.
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