United States Senator Elizabeth Warren recently wrote a letter to Treasury Secretary Janet Yellen regarding Deputy Treasury Secretary Wally Adeyemo’s testimony before the Senate Banking Committee. In the letter, Warren expressed her support for the implementation of more comprehensive measures to combat money laundering and the financing of terrorism (AML/CFT) for stablecoins. During the Senate hearing, Adeyemo discussed the Treasury’s proposals to expand sanctions powers to blockchain validator node operators and other measures.
Warren referenced a document from the Treasury that outlined its enhanced enforcement goals in response to gaps in current regulation, which she referred to as a “letter to Congress” dated November 2023. However, it is important to note that Warren’s comments were not in reference to the stablecoin bill introduced by Senators Kirsten Gillibrand and Cynthia Lummis on April 17, as their bill barely mentions AML/CFT.
Instead, Warren seemed to have in mind a bill that is expected to emerge from the House of Representatives, led by Finance Committee chair Patrick McHenry and ranking member Maxine Waters. In a letter to McHenry and Waters on April 8, Warren expressed similar concerns as those in her letter to Yellen. She concluded her letter to the Treasury Secretary by stating her position.
Taylor Barr, a Senior Policy Associate at the Digital Chamber, commented on the situation, possibly in reference to the Lummis-Gillibrand bill, questioning why Warren did not address certain aspects of the bill such as consumer protection language, receivership text, or the enforcement power of the Fed/OCC. Barr suggested that these points were conveniently left out of Warren’s talking points.
Overall, there are concerns about the stability of stablecoins, including depegging and potential bank runs. These risks are significant and need to be addressed.