While President Joe Biden’s administration continues to drive the issue, congressional Republicans have steadily pushed back expressing a range of concerns about its implementation and how it will impact everyday Americans. To that end, Michael Barr, vice chair for supervision of the Federal Reserve System’s Board of Governors, recently addressed the controversial digital assets amid broader considerations about the U.S. payments system.

“Regardless of who is providing the service, our payments system needs to meet fundamental principles. Among those core principles is ensuring that the payments infrastructure supports broad access and promotes financial inclusion,” said Barr at the Federal Reserve Bank of Philadelphia’s Seventh Annual Fintech Conference. “Separately, we are engaged in efforts to understand the next generation of payments technology and how it can be used to support a secure and efficient payments system.”

Just days before Barr’s presentation, Republican Rep. Patrick McHenry, the chairman of the House Financial Services Committee, alongside several of his legislative colleagues, penned a letter to Federal Reserve Board Chairman Jerome Powell expressing concerns the administration is seeking to “undermine Congress’ progress on legislation to establish a regulatory framework for payment stablecoins through recent supervision and regulation letters.”

Recently, the Federal Reserve established a new program aimed at bolstering supervision of “novel” digital assets and concepts like cryptocurrencies, distributed ledger technology and the “complex” partnerships between tech firms and their non-bank partners delivering financial services.

“We are writing to express concerns regarding the Federal Reserve Board’s … recent supervision and regulation letters titled ‘Creation of Novel Activities Supervision Program’ … and ‘Supervisory Nonobjection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens,’” reads the Republican rebuke. “We are concerned that these actions are being taken to subvert progress made by Congress to establish a payment stablecoin regulatory regime. Moreover, if these letters are left in place, they will undoubtedly deter financial institutions from participating in the digital asset ecosystem.”

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For his part, Barr praised the benefits of stablecoins with respect to creating an efficient payments ecosystem and bank safety.

“When an asset is pegged to a government-issued currency, it is a form of private money. When that asset is also used as a means of payment and a store of value, it borrows the trust of the central bank. So, the Federal Reserve has a strong interest in ensuring that any stablecoin offerings operate within an appropriate federal prudential oversight framework, so they do not threaten financial stability or payments system integrity,” Barr said.

Unsurprisingly, McHenry said Congress is best suited to establish a stablecoin framework in order to protect consumers and deliver market certainty. As such, he called on the Federal Reserve to work with his conference to further develop the concepts included in the Clarity for Payment Stablecoins Act, which he said enjoys bipartisan support.

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“In fact, the Committee’s approach creates a clear and permissible framework for regulated institutions, including banks under the Fed’s purview, to issue payment stablecoins. The legislation imposes strict standards on all payment stablecoin issuers regarding reserves, disclosures, redemptions, liquidity, and risk management that will ensure the integrity of the payment stablecoin,” reads McHenry’s letter reads.

The recent Federal Reserve proposals, it adds, “run counter to this approach.”