|

Top U.S. Regulator Dismisses Stablecoin ‘Bank Run’ Threat as Market Soars Past $300B

🔹

The head of the U.S. Office of the Comptroller of the Currency (OCC), Jonathan Gould, has rejected fears that stablecoins may set off a sudden banking disaster, describing the danger of a deposit run as overstated and unlikely to happen with out warning.

Speaking on the American Bankers Association (ABA) Annual Convention in Charlotte on October 19, Gould instructed attendees that any massive motion of deposits linked to stablecoins “wouldn’t occur in unnoticed trend” and “wouldn’t occur in a single day.”

His feedback come amid rising friction between federal regulators and conventional banking teams over the rise of stablecoins, digital tokens pegged to fiat currencies such as the U.S. greenback.

The market has expanded sharply this 12 months, rising from $205 billion in January to over $307 billion, according to DeFiLlama. Tether’s USDT controls roughly 59% of the market, adopted by Circle’s USDC.

Source: DeFiLlama

The fast enlargement has intensified calls from the banking business for tighter oversight.

What “Loophole” within the GENIUS Act does the Banking Lobby Warn of?

In August, the American Bankers Association and over 50 state banking teams urged Congress to close what they called “loopholes” in the GENIUS Act, the brand new federal stablecoin law signed in July by President Donald Trump.

The teams warned that the regulation permits stablecoin issuers to not directly pay yield via associates, which they declare may result in large deposit outflows from the banking system.

In a joint letter, the Bank Policy Institute, Consumer Bankers Association, Independent Community Bankers of America, and Financial Services Forum mentioned yield-bearing stablecoins may drain as a lot as $6.6 trillion from conventional banks, citing estimates from the U.S. Treasury.

They argued that such outflows may push up rates of interest, scale back mortgage availability, and lift borrowing prices for households and companies.

“Payment stablecoins mustn’t pay curiosity the best way extremely regulated and supervised banks do,” the letter said, emphasizing that stablecoin issuers don’t lend or spend money on securities to generate returns.

Source: BPI

OCC’s Gould Downplays Crisis Fears, Urges Smaller Banks to See Stablecoins as Opportunity, Not Threat

However, Jonathan Gould dismissed the concept of an imminent risk, noting that stablecoin adoption may as a substitute profit smaller banks by offering new methods to compete in digital funds.

He mentioned the OCC intently screens such exercise and would act swiftly if mandatory. “If there have been to be a cloth flight from the banking system, I’d be taking motion,” Gould mentioned, including that extremely positioned officers and commerce associations would additionally step in.

He urged group banks to view stablecoins as a aggressive device, not a risk, suggesting they might assist smaller establishments problem the dominance of Wall Street giants within the funds market.

He additionally added that the OCC is engaged on rulemakings tied to the GENIUS Act and is “very acutely aware of the statutory deadlines that Congress has given us.”

“Payment stablecoin connectivity is likely to be a risk for group banks to interrupt a few of the dominance that exists proper now among the many very largest banks within the fee system in America,” Gould mentioned, pledging to make sure there are “secure and sound” methods for banks to take part.

Stablecoins Face Crossfire: Banks Warn, Regulators Reassure, Adoption Grows

The OCC’s stance contrasts sharply with the warnings issued by main banking associations and international regulators.

Earlier this month, the European Systemic Risk Board, chaired by European Central Bank President Christine Lagarde, cautioned that multi-issuer stablecoin fashions could destabilize the EU’s financial system, whereas the Bank of England announced plans for temporary caps on stablecoin holdings to guard credit score availability.

In the U.S., the talk has additionally drawn sturdy responses from crypto platforms. Coinbase recently published a detailed rebuttal to claims that stablecoins threaten monetary stability, calling the “deposit erosion” narrative a fantasy designed to defend banks’ $187 billion annual fee processing revenues.

The trade argued that stablecoin utilization truly strengthens the U.S. greenback’s world function and located “no significant correlation” between stablecoin adoption and deposit flight from group banks over the previous 5 years.

Meanwhile, Standard Chartered has warned that over $1 trillion could flow out of emerging-market banks into stablecoins by 2028 as adoption accelerates globally, accounting for as much as 10% of the U.S. cash provide.

The financial institution mentioned stablecoins are more and more serving as dollar-based financial savings instruments in nations dealing with high inflation and weak native currencies.

Despite the continuing debate, stablecoin integration into mainstream finance is accelerating. Coinbase, Circle, Ripple, and Paxos are all searching for federal banking charters to problem or handle stablecoins beneath OCC supervision.

Japanese giant Sony also joined that list this month, making use of to determine “Connectia Trust,” a U.S. nationwide crypto financial institution that will problem a dollar-pegged token beneath OCC regulation.

While banks proceed to warn of dangers, Treasury Secretary Scott Bessent has taken a more optimistic stance, saying digital {dollars} may develop entry to U.S. foreign money worldwide and increase demand for Treasuries.

The put up Top U.S. Regulator Dismisses Stablecoin ‘Bank Run’ Threat as Market Soars Past $300B appeared first on Cryptonews.

Similar Posts