PNC CEO in U.S.: “Stablecoins must choose—an investment product or a payment instrument”

Bill Demchak, chief executive officer (CEO) of PNC Financial Services Group, one of the largest U.S. banks, voiced strong concerns about interest-bearing stablecoins. He said it is undesirable from a regulatory perspective for stablecoins to straddle the line between investment products and payment instruments.

According to CoinDesk, a digital-asset (cryptocurrency) news outlet, Demchak said on an earnings conference call on the 16th (local time) that “stablecoins that pay interest to holders are essentially similar to money market funds (MMFs),” adding that “they should therefore be subject to the same level of regulation.”

He went on to stress that “without a clear regulatory framework, it is an issue that warrants caution for stablecoins to be used simultaneously as investment products and payment instruments,” and that he “opposes attempts by crypto firms to pay interest on stablecoins.”

In particular, Demchak said, “in the traditional financial system, this kind of structure is not permitted without stringent oversight,” adding that “stablecoins have to make an either-or choice: whether they want to be money market funds or whether they want to be payment instruments.”

The remarks come as the U.S. Congress and regulators continue discussions over whether to allow interest payments on stablecoins, and they are expected to have no small impact on the direction of future legislation and regulation.