Whether regulations on stablecoins and digital assets should be addressed at the state or federal level was the topic of discussion among at least two U.S. lawmakers in a hearing for the House Committee on Financial Services.

Speaking virtually at a Tuesday hearing titled “Digital Assets and the Future of Finance: The President’s Working Group on Financial Markets’ Report on Stablecoins,” North Carolina Representative and ranking committee member Patrick McHenry asked the committee to consider state-level regulatory frameworks in lieu of a comprehensive federal law on stablecoins. In response to McHenry, Jean Nellie Liang, the undersecretary for domestic finance at the U.S. Treasury Department, said there was no explicit law governing stablecoins and digital assets at the federal level but rather a regulatory framework which had been applied to “various aspects” of tokens like consumer protection laws.

Liang added that during the development of a November report from the President’s Working Group on Financial Markets, or PWG, officials consulted with state regulators to recommend what level of federal oversight, if any, would be required for innovative technology like stablecoins. The group concluded that stablecoin issuers in the U.S. should be held to the same standards as insured depository institutions including state and federally chartered banks.

“The PWG report believes that a more consistent, less fragmented framework is preferred,” said Liang, adding that the group’s proposal could apply to a state-chartered or federal-chartered bank. “The state regulatory system is fragmented. There is an issuer, and then there are the custodial wallet providers, the other parts of the arrangement, that are subject to different