Federal Reserve Governor Michelle Bowman has called for a cooperative effort between state and federal authorities to regulate stablecoins, as legislative efforts continue to take shape. Speaking at the Chamber of Digital Commerce's DC Blockchain Summit, Bowman highlighted the importance of a unified regulatory framework to address the complexities and risks associated with stablecoins.

During the summit on Wednesday, Bowman was asked about the respective roles of state and federal governments in managing stablecoin regulations. Emphasizing the need for collaboration, she noted a greater willingness among state officials to engage in discussions about expanding into the stablecoin space.

"The crucial aspect for me is the partnership," Bowman stated. "U.S. currency involves risks such as runs and other types of financial instability that may necessitate protections similar to those we provide for the U.S. dollar. From the Federal Reserve's perspective, it is essential that we have the opportunity to contribute and collaborate on whatever regulatory framework emerges, whether it’s one of the current bills or another proposal as we advance the potential for stablecoins in the United States."

While Bowman refrained from endorsing specific legislation, it is evident that lawmakers, including House Financial Services Committee Chair Patrick McHenry (R-N.C.) and ranking Democrat Maxine Waters (D-Calif.), have been diligently working on stablecoin legislation for nearly two years.

A significant sticking point in their bill has been the debate over whether federal or state regulators should serve as the primary overseer of stablecoin issuers. Last summer, Waters criticized the bill, labeling it "deeply problematic" due to a provision that would allow state regulators to approve stablecoin issuances without the Federal Reserve's input, an issue that remains unresolved.

Additionally, Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced a bill in April aimed at establishing both federal and state regulatory frameworks for stablecoin issuers, thereby preserving the dual banking system. The proposed legislation includes a cap that permits state trust companies to issue payment stablecoins up to $10 billion.

Speaking at a separate panel at the DC Blockchain Summit, Gillibrand expressed her desire to advance the bill, lamenting the lack of progress. "We haven't been able to get a hearing or a markup or even a debate in the committees of jurisdiction," she said. "So I've been somewhat frustrated because we need to do the work." She added that while they have collaborated effectively with the Treasury and the Fed, there is a noticeable absence of focused attention on these issues from the White House.

The ongoing dialogue underscores the complex and evolving landscape of stablecoin regulation, highlighting the necessity for a coordinated approach to ensure stability and innovation in the financial system.