A House hearing on banking regulators turned into a flashpoint over whether the federal government should use stablecoins to make payments — and whether doing so would invite a new era of tax dodging.
At Thursday’s Oversight of Prudential Regulators hearing, National Credit Union Administration Chairman Kyle Hauptman floated the idea that the government could distribute funds in dollar‑pegged tokens. Hauptman argued stablecoins settle 24/7 — unlike traditional payment rails that stop for weekends and holidays — so tax refunds “may eventually arrive on Sundays or holidays,” and emergency stimulus could be delivered “in a more timely and secure manner.”
But long-time crypto skeptic Rep. Brad Sherman (D‑CA) blasted the proposal, calling it “I can’t think of a worse idea.” Sherman warned that government-issued stablecoin payments would “sanctify an alternative to the U.S. dollar, an alternative designed to facilitate a tax-evasion economy.” He also raised alarms about yield on stablecoins, saying “the smartest, or at least the best-paid lawyers in the country” are hunting for loopholes around interest payments and urging regulators to craft rules that can withstand that pressure.
Hauptman framed dollar‑pegged tokens as a strategic tool to defend the greenback’s global role against rivals in Beijing, Tehran and Moscow, arguing they could help sustain demand for Treasuries and the dollar’s international standing.
The hearing also grew contentious over a separate matter: the handling of World Liberty Financial’s application for a national trust‑bank charter. Comptroller of the Currency Jonathan Gould defended the agency amid pointed questioning from Rep. Gregory Meeks (D‑NY), who asked whether Gould was “working for the American people or working for the Trump family.” Gould called the line of questioning “unfortunate and without precedent,” saying the criticisms were the only political pressure he’d felt outside of Senate colleagues.
On regulatory progress, federal officials said they’re moving forward under the GENIUS Act passed last summer. FDIC Chairman Travis Hill said the agency and its partners will soon propose customer-identification requirements for stablecoin issuers — a key piece of the emerging oversight framework.
These regulatory shifts come as crypto firms deepen their ties to traditional banking. Falcon Finance launched fUSD on Wednesday with Anchorage Digital — the first federally chartered crypto bank — touting the token as GENIUS-compliant. The Federal Reserve has also granted crypto exchange Kraken a master account, though with restrictions resembling the “skinny” master account the Fed proposed last year.
World Liberty Financial has claimed it’s in the “final stages” of conditional approval and said Trump family members remain involved despite regulatory hurdles. That backdrop highlights how banking charter approvals for crypto companies have become politically charged: Senator Elizabeth Warren (D‑MA) has called some approvals illegal, while the Trump White House has directed the Fed to review crypto firms’ master account access and pushed federal agencies to eliminate “overly burdensome and fragmented regulations and supervisory practices.”
The hearing underscored a central tension for U.S. policymakers: stablecoins could modernize payments and keep the dollar competitive abroad — but lawmakers like Sherman worry the benefits could come with new risks for tax enforcement, financial stability and the integrity of the dollar itself. Regulators will now try to translate those competing priorities into concrete rules.
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