Heath Tarbert, who previously served as the Chairman of the Commodity Futures Trading Commission (CFTC) and is now the Chief Legal Officer at Circle, has penned an opinion piece for CoinDesk emphasizing the need for immediate legislative action on stablecoins.

Tarbert draws a parallel between the financial crisis instigated by the collapse of Lehman Brothers 15 years ago and the current state of digital currencies. He argues that just like the Dodd-Frank Act fortified the financial system back then, similar steps are needed today to regulate stablecoins.

According to Tarbert, digital currencies offer the potential to modernize the U.S. financial system, strengthen the U.S. dollar, and make financial transactions more efficient for businesses and consumers alike. However, he insists that these advantages can only be realized if lawmakers enact legislation that focuses on financial stability and consumer protection.

Tarbert describes payment stablecoins as an increasingly important element in financial transactions today, including commerce, remittances, and humanitarian aid. He notes that the growing adoption of stablecoins attests to their practical utility, as they enable quick and cost-effective digital dollar transfers worldwide.

He further discusses the benefits of stablecoins, stating that they can help reduce transaction costs, particularly for working American families. Tarbert contrasts the high fees and delays associated with traditional wire transfers with the speed and low cost of sending stablecoins. He also mentions the United Nations’ use of stablecoins to provide aid to Ukrainian refugees, underscoring their broader utility.

Tarbert indicates that Congress is beginning to understand the importance of regulating digital assets. He cites the recent advancement of bills aimed at overseeing the digital asset economy, including the Clarity for Payment Stablecoins Act, which the House Financial Services Committee has approved. Tarbert lists several provisions that he believes should be part of stablecoin legislation, including risk management, asset backing requirements, and transparency and reporting standards.

Tarbert also warns of the potential risks associated with unregulated stablecoins. He states that a collapse of a global stablecoin without adequate backing could severely impact both the U.S. financial markets and the broader economy. He refers to cautionary statements from Treasury Secretary Janet Yellen and the President’s Working Group on Capital Markets regarding the need for stablecoin legislation.

Lastly, Tarbert touches on the international implications of not regulating stablecoins. He notes that China and Russia are actively developing their own digital assets, which could challenge the U.S. dollar’s status as the world’s reserve currency. Tarbert states that by enacting stablecoin legislation, Congress can establish standards to protect consumers, improve financial stability, and maintain the dollar’s global dominance.