Senators Question Regulatory Bodies on Trump's USD1 Stablecoin Impact

Senators Question Regulatory Bodies on Trump's USD1 Stablecoin Impact
Grzegorz
Grzegorz3 months ago

Prominent U.S. Senators, including Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), Chris Van Hollen (D-Md.), Jack Reed (D-RI), and Cory Booker (D-N.J.), are seeking clarity from the Office of the Comptroller of the Currency (OCC) and the Federal Reserve (the Fed) regarding their strategy to uphold credibility, maintain integrity, and navigate the conflicts of interest surrounding President Trump’s stablecoin “USD1.” They are concerned about the potential unprecedented threats this poses to the financial system as the President and his family spearhead this venture.

The rollout of USD1 coincides with President Trump’s efforts to undermine the independence of financial regulators at a time when Congress is deliberating the GENIUS Act. This proposed law assigns the OCC and the Fed the responsibility of overseeing stablecoin regulation, including USD1. Yet, the GENIUS Act lacks mechanisms to prevent presidential interference that could hinder actions diminishing profits for the President’s stablecoin initiatives or steering regulators in his favor.

The Senators specifically highlighted potential moves President Trump could make to sway the OCC and the Fed, ensuring benefits for his financial venture, World Liberty Financial (WLF), the entity behind USD1:

  • Presidential review or influence over decisions made by the OCC concerning USD1’s stablecoin status.
  • Possibility of thwarting the OCC’s development of stablecoin standards or halting enforcement against WLF.
  • During financial distress, directing the Fed to introduce emergency liquidity facilities inclusive of USD1.
  • Attempting to secure a master account for WLF at the central bank.
  • Blocking aid to competitors of USD1.

The Senators are urging the OCC and the Fed to elaborate on their plans to mitigate any risks associated with USD1 while resisting political pressure. They are also interested in understanding the existing measures to safeguard regulatory, supervisory, and enforcement actions from possible White House influence.

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