Sherman Slams Stablecoin Payments as Tax Evasion Tool
Longtime cryptocurrency critic U.S. Representative Brad Sherman (D-CA-32) voiced strong opposition to government stablecoin payments during a House hearing on banking regulators Thursday, asserting that such a system would facilitate tax evasion.
During the hearing, titled “Oversight of Prudential Regulators,” National Credit Union Administration Chairman Kyle Hauptman presented the idea of the federal government distributing funds via stablecoins. He highlighted that stablecoins operate around the clock, unlike traditional payment systems constrained by business hours. Hauptman suggested this could allow for tax refunds to be issued on Sundays or holidays and emergency stimulus payments to be delivered more swiftly and securely.
Sherman, however, countered that he “can’t think of a worse idea,” arguing that government payments in stablecoins would “sanctify an alternative to the U.S. dollar, an alternative designed to facilitate a tax-evasion economy.”
Hauptman defended dollar-pegged tokens as a means to counter rivals in Beijing, Tehran, and Moscow and to preserve the dollar’s global standing by stimulating demand for U.S. Treasuries.
The issue of stablecoin yields also arose, with Sherman warning that “the smartest, or at least the best-paid lawyers in the country” were already seeking loopholes around interest payments on stablecoins. He urged supervisors to “write regulations that withstand that.”
World Liberty Financial Charter Application Sparks Confrontation
The hearing also featured Comptroller of the Currency Jonathan Gould defending his agency’s handling of the national trust-bank charter application from World Liberty Financial, a firm linked to the Trump family.
The House Financial Services Committee hearing became contentious when Representative Gregory Meeks (D-NY-5) directly questioned Gould’s independence, asking if he was “working for the American people or working for the Trump family.”
Gould pushed back, labeling Meeks’ remarks as “unfortunate and without precedent.” He added, “Your attempts to continue to pressure me are the only political pressure I’ve felt from anyone other than your Senate colleagues.”
Regulators Outline Stablecoin Oversight Progress
Beyond the World Liberty Financial issue, federal regulators provided updates on their progress in overseeing stablecoins under the GENIUS Act, passed last summer. FDIC Chairman Travis Hill stated that his agency, along with others, would soon propose customer identification requirements for stablecoin issuers.
These regulatory developments coincide with increased access for cryptocurrency firms to traditional banking infrastructure. Falcon Financial launched its fUSD stablecoin on Wednesday, utilizing Anchorage Digital—the first federally chartered crypto bank—as a GENIUS-compliant payments token. The Federal Reserve has also granted cryptocurrency exchange Kraken a master account, though with certain limitations, similar to the “skinny” master account proposed by the Fed’s board of governors last year.
World Liberty Financial claimed last month to be in the “final stages” of receiving conditional approval, asserting that the Trump sons have not abandoned the project despite regulatory hurdles.
Banking charter approvals for crypto firms have become a politically charged issue. Senator Elizabeth Warren (D-MA) has deemed approvals for firms like Coinbase and Ripple as illegal. Meanwhile, the Trump White House had previously directed the Federal Reserve to review master account access for crypto firms and instructed federal regulators to remove “overly burdensome and fragmented regulations and supervisory practices.”
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