The crypto firm tied to President Donald Trump, World Liberty Financial Inc., was again a focus of political scrutiny in a congressional hearing in which the chief of the U.S. Office of the Comptroller of the Currency suggested the only political pressure his agency feels on its decision of whether or not to give the firm a bank charter comes from Democrats, not Trump.
Comptroller of the Currency Jonathan Gould’s rebuttal had come in response to Representative Gregory Meeks, a New York Democrat, who asked during the Thursday hearing whether Gould is “working for the American people or working as a Trump fixer, which is it?”
“Your attempts to continue to pressure me are the only political pressure I’ve felt from anyone other than your Senate colleagues,” Gould said, referring to similar questions he’d heard from Democrats including Senator Elizabeth Warren. “That is very unfortunate and unprecedented,” he added, insisting that his agency will do its job under the statute governing charters.
Democrats continue to argue that World Liberty’s connection to foreign investors and crypto partners that have been previously associated with illicit behavior — including global exchange Binance — suggest that it’s not fit for a U.S. banking charter, and they’ve argued it’s inappropriate for a Trump appointee to be deciding whether to give such a benefit to a business partially owned by the president and his family.
Amid Thursday’s verbal sparring, Gould said his agency is following ethics laws in the application for a national trust-bank charter for World Liberty Trust Company.
The Trump-tied business is also a stablecoin issuer, which was a central topic of the hearing of the House Financial Services Committee, at which the U.S. supervisors of the banking and credit union industries explained where they’re at on implementing the Guiding and Establishing National Innovation for U.S. Stablecoins ($GENIUS) Act.
The regulators have already issued several proposed rules to put the new law into place, and Federal Deposit Insurance Corp. Chairman Travis Hill said another is coming soon, saying his agency and others will propose a rule requiring “customer identification programs” for stablecoin issuers “in the very near future.”
Kyle Hauptman, chairman of the National Credit Union Administration, touted the U.S. rise of stablecoins in his testimony.
“As stablecoins are more widely adopted, we Americans may no longer be made fun of for speaking about how many ‘business days’ a payment will take to settle. Every day is a business day with stablecoins,” he said. “Tax refunds may eventually arrive on Sundays or holidays. And if we ever have a repeat of the COVID outbreak in March 2020, Americans should be able to receive emergency stimulus funds in a more timely and secure manner.”
But Representative Brad Sherman, a California Democrat who routinely speaks against the risks of crypto, said, “I can’t think of a worse idea” than allowing government payments in stablecoins. “It would sanctify an alternative to the U.S. dollar, an alternative designed to facilitate a tax-evasion economy.”
Sherman also argued that the $GENIUS Act “requires that there be no interest paid on stablecoins,” and he contended that “the smartest, or at least the best-paid lawyers in the country” are trying to figure out ways to evade that prohibition, so the regulators need to “write regulations that withstand that.”
Also at the hearing, a lawmaker asked Federal Reserve Vice Chair for Supervision Michelle Bowman about the Fed master account granted to crypto exchange Kraken.
Bowman said the approval granted only “very limited access to the payments system” and for an initially narrow duration of 12 months, during which she said the Fed will be watching it closely to educate itself in preparation for formal rules for providing such accounts. The rest of the crypto industry is also keenly interested in the outcome of the Fed’s policy work on opening such access to the central bank’s payments system and services, commonly known as “skinny” master accounts.
Read More: U.S. Senator Warren rebuffed on delay of World Liberty bank charter over Trump ties
