(Bloomberg) — The Federal Reserve’s top bank cop plans to tell House lawmakers Tuesday that she will work to establish new rules for banks and stablecoins, as regulators seek to ensure healthy competition between Wall Street, fintechs and crypto firms.
“As a regulator, it is my role to encourage innovation in a responsible manner, and we must continuously improve our ability to supervise the risks to safety and soundness that innovation presents,” Bowman said in prepared remarks for a House Financial Services Committee hearing.
She added that new technologies can create a more efficient banking sector that expands access to credit while also leveling the playing field with fintech and digital asset companies.
Bowman also said she will work with other agencies to develop capital and diversification regulations for stablecoin issuers as required by the Genius Act, which requires those issuers to formally register and hold dollar-for-dollar reserves. She underscored the agencies will provide clarity on digital assets and regulatory feedback on proposed new use cases.
Bowman’s remarks come amid a clash between banks and crypto firms over the future of digital-asset regulation, including a fight for access to bank charters. For crypto firms, these charters could provide a multitude of benefits, including a stronger degree of legitimacy.
Traditional lenders warn, however, that the result could be an uneven playing field or a hollowing out of the charter system, where firms can operate with the legitimacy of a bank license but without the full responsibilities that have historically come with it.
Bowman’s testimony also highlighted her efforts to finalize several bank capital measures, including a long-awaited measure known as Basel III Endgame.
“My approach is to address the calibration of the new framework from the bottom up, rather than reverse engineer changes to achieve pre-determined or preconceived approaches to capital requirements,” Bowman said.
Bloomberg News previously reported that the Federal Reserve has shown other US regulators the outlines of a revised Basel III plan that would dramatically relax a Biden-era capital proposal for Wall Street’s largest lenders.
Bowman also said the Fed is working to refine the surcharge for big banks in coordination with broader capital framework efforts.
More stories like this are available on bloomberg.com