Key Points
- •Rep. Lynch challenged Michelle Bowman on her interpretation of digital assets and stablecoins.
- •Bowman stated that the GENIUS Act mandates the Federal Reserve's work on digital assets.
- •The FDIC plans to release a proposed stablecoin oversight framework by the end of the month.
Lynch Questions Bowman on "Engage Fully" Remarks
U.S. Representative Stephen Lynch pressed Federal Reserve Vice Chair for Supervision Michelle Bowman on Tuesday, questioning her past encouragement for banks to "engage fully" with digital assets. Lynch expressed confusion over how the Fed distinguishes between digital assets and stablecoins.
During the oversight hearing, Lynch referenced Bowman’s appearance at the Santander International Banking Conference in November. He suggested she had endorsed banks becoming more active in cryptocurrencies. Bowman clarified that her comments referred broadly to digital assets, not specifically crypto tokens.
Fed Cites Congressional Mandate for Digital Asset Work
Bowman explained that the Federal Reserve's involvement in digital assets stems from the recently enacted GENIUS Act. This law regulates payment stablecoins and directs federal agencies to craft supporting rules.
The GENIUS Act requires us to promulgate regulations to allow these types of activities.
Bowman told lawmakers. She also reiterated her previous stance that Fed staff should be allowed to hold small amounts of digital assets to better understand the technology.
There’s no replacement for experimenting and understanding how ownership and transfer flows work.
she added.
FDIC Signals Stablecoin Oversight Rules Imminent
Travis Hill, acting chair of the Federal Deposit Insurance Corporation (FDIC), also testified. Hill confirmed that the agency will unveil a proposed regulatory framework for stablecoin issuers later this month. This marks a significant step in implementing the GENIUS Act, which was signed into law in July.
Hill stated that the forthcoming proposal will outline supervisory expectations for firms issuing U.S.-dollar-pegged tokens. This sector has experienced rapid growth despite ongoing questions surrounding risk, backing, and consumer protection.
The report recommends clarifying or expanding permissible activities in which banks may engage, including the tokenization of assets and liabilities.
Hill said.
We are also currently developing guidance to provide additional clarity with respect to the regulatory status of tokenized deposits.