World Liberty charter questioned as 3 US regulators defend stablecoin rules

A House Financial Services Committee hearing on June 4 exposed deepening divisions over how US regulators should handle stablecoin oversight and bank charters for politically connected crypto firms.

Representative Gregory Meeks, a New York Democrat, pressed Comptroller of the Currency Jonathan Gould on whether the Office of the Comptroller of the Currency was "working for the American people" or acting as a "Trump fixer" in its review of World Liberty Financial Inc.'s application for a national trust-bank charter. Gould rejected the accusation, telling the committee that Democratic lawmakers had applied the only political pressure he had felt — a dynamic he called "unfortunate and unprecedented."

World Liberty Financial, the crypto firm tied to President Donald Trump and his family, has drawn scrutiny from Senator Elizabeth Warren and other Democrats who argue its foreign investors and crypto partners, including Binance, raise conflict-of-interest concerns. Gould said the OCC would review the application under the law governing bank charters and was following ethics rules.

The hearing also focused on how the GENIUS Act, the stablecoin legislation signed into law earlier this year, would be enforced. Federal Deposit Insurance Corp. Chairman Travis Hill told lawmakers that regulators had already proposed several rules tied to the act and would soon propose a rule requiring customer identification programs for stablecoin issuers. The rulemaking process remains ongoing, with several requirements still being drafted.

Kyle Hauptman, chairman of the National Credit Union Administration, said stablecoins could make US payments faster, suggesting Americans may one day receive tax refunds or emergency government funds on weekends and holidays through stablecoin payment systems. Representative Brad Sherman, a California Democrat and longtime crypto critic, rejected the idea, telling the committee he could not think of a worse approach because it would legitimize an alternative to the US dollar.

Sherman also warned that the GENIUS Act bars stablecoin issuers from paying interest but said lawyers may look for ways around that restriction. He urged regulators to write rules strong enough to prevent evasion.

Fed master account for Kraken draws questions

Federal Reserve Vice Chair for Supervision Michelle Bowman faced questions about the Fed master account granted to crypto exchange Kraken. Bowman said Kraken received only limited access to the payments system for an initial 12-month period and that the Fed would monitor the arrangement closely while it prepares formal rules for similar access requests. Crypto firms are watching the Fed's policy work because so-called skinny master accounts could give approved companies limited access to central bank payment services.

The hearing underscored the widening gap between Democratic and Republican approaches to crypto oversight. Democrats focused on conflicts of interest and consumer protections, while Republicans emphasized the need for clear rules to keep crypto businesses in the US. With the midterm elections approaching, the window for further legislative action on crypto market structure is narrowing, according to JPMorgan analysts who said the Clarity Act faces a shrinking path to passage this year.

This article is for informational purposes only and does not constitute investment advice.