United Texas Bank CEO proposes to allow only banks to issue stablecoins

What’s new? United Texas Bank CEO Scott Beck has proposed that only licensed banks, not issuers like Circle, should be allowed to issue US dollar-backed stablecoins. Beck spoke to the Texas Work Group on Blockchain Matters and recalled that stablecoin issuers must meet the same standards as insured depository institutions, including state and federal banks. The Cointelegraph reports this.

Information on the Cointelegraph website

What else does Beck say? According to him, if stablecoins are considered “money,” then banks are the proper economic entities to issue and manage them. Beck believes that banks have the expertise and legal framework to handle money, and unlike today’s stablecoin market participants, banks are heavily regulated at the state and national levels. He added:

“Bringing stablecoin activities into the banking sector and prohibiting non-banks from issuing stablecoins will enhance consumer protection and attract additional resources and capital to this emerging area of economic activity.”

Responding to questions from working group member and MoneyGram general counsel Robert Villaseñor, Beck said that stablecoin issuers such as Circle hold assets at “other institutions” as opposed to banks, “effectively sucking deposits out of the banking industry.” He added that some stablecoins are particularly vulnerable and potentially threatening to the economy, and handing over the issuance to banks ensures compliance with Know Your Customer (KYC) rules.

Texas Blockchain Council President Lee Bratcher challenged Beck’s proposal as “anti-competitive.” The bank chief noted that one of the key differences between licensed banks and private companies issuing stablecoins is that in the former, the cash behind the tokens would remain with the Fed, which also ensures that the funds would be insured by the Federal Deposit Insurance Corporation (FDIC).

Circle’s USD Coin (USDC) is pegged to the dollar and backed by cash or cash equivalents, including bank deposits, Treasury bills, or commercial paper. In March, Circle announced that BNY Mellon Bank would be responsible for storing the USDC reserves. The asset ranks 4th on the list of cryptocurrencies by market capitalization with a figure of $52,45 billion.