In brief
- Rep. Brad Sherman said allowing government payments in stablecoins would “sanctify an alternative to the U.S. dollar” built to “facilitate a tax-evasion economy.”
- His rebuke followed NCUA Chairman Kyle Hauptman’s pitch that stablecoins could speed up tax refunds and emergency stimulus payments.
- The clash came at a House Financial Services Committee hearing on regulators’ progress implementing the $GENIUS Act.
Long-time crypto critic U.S. Rep. Brad Sherman (D-CA-32) took aim at government stablecoin payments during a House hearing on banking regulators Thursday, arguing that they would facilitate tax evasion.
During the hearing on Oversight of Prudential Regulators, National Credit Union Administration Chairman Kyle Hauptman pitched the prospect of the federal government distributing money in stablecoins, noting that stablecoins settle around the clock, unlike traditional rails bound by business days. Hauptman suggested that, “Tax refunds may eventually arrive on Sundays or holidays,” and that emergency stimulus payments could be delivered in a “more timely and secure manner.”
Sherman responded that, “I can’t think of a worse idea,” arguing that government payments in stablecoins “would sanctify an alternative to the U.S. dollar, an alternative designed to facilitate a tax-evasion economy.”
Hauptman framed dollar-pegged tokens as a tool to defend the greenback against rivals in Beijing, Tehran and Moscow and maintain the dollar’s “global status” through stimulating demand for Treasuries.
The issue of stablecoin yield also surfaced, with Sherman warning that “the smartest, or at least the best-paid lawyers in the country” were already hunting for loopholes around interest payments on stablecoins, and urging supervisors to “write regulations that withstand that.”
World Liberty in the spotlight
The hearing also saw Comptroller of the Currency Jonathan Gould defend his agency’s handling of Trump-linked World Liberty Financial’s national trust-bank charter application.
The House Financial Services Committee hearing turned confrontational when Rep. Gregory Meeks, (D-NY-5), directly challenged Gould’s independence, asking whether he was “working for the American people or working for the Trump family.”
Gould pushed back, calling Meeks’ comments “unfortunate and without precedent,” and adding that, “Your attempts to continue to pressure me are the only political pressure I’ve felt from anyone other than your Senate colleagues.”
Beyond the World Liberty issue, federal regulators outlined progress on stablecoin oversight under the $GENIUS Act passed last summer. FDIC Chairman Travis Hill said his agency and others will propose customer identification requirements for stablecoin issuers in the very near future.
The regulatory developments come as crypto firms gain further access to traditional banking infrastructure. Falcon Finance launched its fUSD stablecoin Wednesday with Anchorage Digital—the first federally chartered crypto bank—as a $GENIUS-compliant payments token. The Federal Reserve has also granted crypto exchange Kraken a master account—albeit with some limitations, akin to the “skinny” master account proposed by the Fed’s board of governors last year.
World Liberty Financial claimed last month that the firm was “in the final stages” of receiving conditional approval, while maintaining that the Trump sons haven’t abandoned the project despite regulatory challenges.
Banking charter approvals for crypto firms have become a political flashpoint, with Senator Elizabeth Warren (D-MA) calling approvals for firms such as Coinbase and Ripple illegal. The Trump White House, meanwhile, has ordered the Fed to review crypto firms’ master account access, and directed federal regulators to remove “overly burdensome and fragmented regulations and supervisory practices.”