Randy Guynn, a well-known attorney in U.S. banking law, has advocated for stablecoins to be regulated in line with traditional banking standards.
In his testimony before the U.S. House Financial Services Committee, Guynn asserted that stablecoins need to provide the same level of protection as insured bank deposits and central bank currency.
He stressed that any regulatory framework for stablecoins should mandate that issuers maintain liquidity reserves and capital buffers akin to those required of banks.
“If a payment stablecoin issuer maintains a well-calibrated reserve of liquid assets, along with a capital buffer and no significant additional liabilities, payment stablecoins should be as secure as insured bank deposits and central bank currency,” Guynn argued.
As the chair of the Financial Institutions Group at Davis Polk & Wardwell LLP, Guynn emphasized that stablecoins function as a form of digital private money, warranting appropriate regulation. He noted that innovations in private currency have historically influenced financial systems.
However, he cautioned that inadequate regulatory oversight could lead to financial stability challenges reminiscent of those experienced during previous banking crises.
“For much of history, individuals have enjoyed the freedom to innovate in the creation of private money without government interference, including any mandates to seek government approval,” Guynn stated.
This hearing occurs in the context of ongoing deliberations surrounding the Stablecoin Regulation Act, legislation designed to establish clear guidelines for stablecoin issuers. Guynn, who has previously played a role in the development of a major stablecoin initiative, argued that if regulated effectively, stablecoins could improve payment efficiency while minimizing associated risks.
His testimony contributes to the larger discussion about whether stablecoins should be treated like banks, money market funds, or whether a distinct regulatory category is needed.