A hearing on stablecoin regulation in the US House of Representatives’ Financial Services Committee yesterday revealed strongly diverging views on both stablecoins and crypto more broadly among lawmakers on Capitol Hill.

“For both traditional and digital-native intermediaries, it is critical to ensure that regulatory frameworks are in place that appropriately address risks to businesses, consumers, and investors, as well as the broader financial system,” Undersecretary for Domestic Finance at the US Treasury Department, Nellie Liang, said in her testimony during the hearing.

The hearing, titled Digital Assets and the Future of Finance, comes in the wake of the President’s Working Group (PWG) report on stablecoins from late last year. The report was criticized heavily by members of the crypto community for what some called “fear-mongering” over perceived risks in stablecoins.

During this latest hearing, Undersecretary Liang, who was the only witness to testify, underscored the need to bring more oversight to stablecoin issuers, as well as to address risks posed by leverage in the stablecoin sector.

“As we saw in the 2007-2008 financial crisis (and most that preceded it), leverage can play a key role in catalyzing and accelerating financial instability,” Liang said, among other things.

During a question-and-answer session following Liang’s testimony, questions from lawmakers revealed a divide between Democratic and Republican representatives. Generally, the Democrats were more concerned with consumer protection and the need to regulate stablecoin issuers, while some Republicans favored an approach where regulations to a larger extent would be left to individual states.

There is no federal law currently to address digital assets,