Stablecoins should be treated like investment products, not banks, Jan van Eck, the CEO of investment firm VanEck, wrote in a Barron’s op-ed on Wednesday.
“They don’t lend money, so I don’t understand why there is a push to regulate them like banks. Bank regulation may in fact imply some sort of government guarantee,” he wrote.
Van Eck’s broadside followed two weeks after Nellie Liang, the Treasury Undersecretary for Domestic Finance, testified before Congress that stablecoins “are bank-like products … as well as an investment-like product, which is why there was a regulatory gap.” A group of regulators called the President’s Working Group for Financial Markets published a report last year recommending that stablecoins fall under the same regulations as banks.
In her testimony, Liang said that technology companies without bank licensing shouldn't offer stablecoins.
Van Eck criticized the Working Group report for not seeing the similarities between stablecoins and money-market funds.
“Despite the similarity that stablecoins have with money market funds, the PWG suggested that stablecoin issuers be “insured depository institutions.” Stablecoins invest in securities; they don’t lend like banks do,” van Eck wrote.
He made two recommendations for a potential, stablecoin regulatory framework.
First, he suggested that the U.S. Securities and Exchange Commission oversee stablecoins for a four-year trial period similar to how it considers investment funds under the Investment Company Act of 1940.
Second, van Eck recommended not forcing tax withholdings on stablecoins in the future. That move would give stablecoins an opportunity to prove their value in the U.S. “Most stablecoins currently don’t pay dividends,” he wrote. “We need, however, to imagine a day when stablecoins pay interest and plan technologically and regulatorily for that day.”
Jerald David, president of asset management firm Arca, supports van Eck’s first proposal, saying that “stablecoins on the market today resemble more of a ‘40 Act product than a bank,”
"Adding a wrapper and creating a Blockchain Transferred Fund would allow for a U.S. dollar proxy that would be welcomed by the banks and large scale financial institutions,” David wrote in an email to CoinDesk.
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