VanEck CEO Says Stablecoins Are More Like Funds Than Banks
NEW YORK–(BUSINESS WIRE)–Jan van Eck, CEO of leading global asset manager VanEck, today published an op-ed on Barrons.com titled “What the Government’s Recommendations for Stablecoins Went Wrong and How to Do Better.”
“Stablecoins trade on an exchange. They invest to track a target asset, primarily the US dollar. Their price can fluctuate, and they cash in and redeem like ETFs,” says van Eck. “They don’t lend money, so I don’t understand why there is a push to regulate them like banks. Banking regulations may actually involve some sort of government guarantee.
“Because ETFs must use qualified custodians, this should address the primary regulatory concern of stablecoins not having the assets they claim,” he says.
In this article, van Eck details the similarities between stablecoins and mutual funds, compellingly explaining why policymakers should use the regulatory regimes around mutual funds and the ETF space to craft their recommendations for stable coins. The stablecoin paper released last November by the President’s Working Group (PWG) on Financial Markets “reflected…regulatory confusion,” he writes, “and made some odd recommendations.”
“First, the PWG struggled to define a stablecoin,” he writes. “Despite the similarity of stablecoins to money market funds, the PWG has suggested that stablecoin issuers be ‘insured depository institutions,’ regardless of whether stablecoins invest in securities and do not lend money. the same way as banks. Finally, he points to the PWG’s recommendation that stablecoin issuers comply with activity restrictions that limit affiliation with commercial entities, which he calls “an unnecessary additional burden with no obvious benefit.”
Van Eck then adds two specific recommendations for a more forward-thinking regulatory approach to stablecoins:
Allowing a stablecoin to voluntarily submit to supervision by the Securities and Exchange Commission, similar to a fund operating under the Investment Company Act of 1940.
Do not force withholding tax on stablecoins.
Through these approaches, he adds, the market is allowed “to determine the value of this additional oversight…and that’s better than creating regulatory requirements that treat (stablecoins) like banks when they are not”.
The full article is available by clicking here.
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