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Chairman French Hill on the Future of Stablecoin Regulation · The Stable Pulse

• 0:00
  Intro: Passage of the stablecoin legislation drafted by the Senate dubbed the Genius Act because analysts say a wave of competition can complicate things.
• 0:08
  Intro: Stablecoin is your debut right here at the NASDAQ.
• 0:11
  Intro: Thank you so much for joining us again on the Stablecoin Pulse podcast.
• 0:17
  Intro: I'm joined today by a fantastic guest, Representative French Hill of the Great State of Arkansas.
• 0:23
  Intro: Representative Hill is also chair of the House Financial Services Committee and has been representing Arkansas's second congressional district since 2015.
• 0:32
  Intro: He actually has a longtime history financial services.
• 0:36
  Intro: Representative Hill, I believe your dad and then his dad also ran a financial services firm based out of Little Rock.
• 0:43
  Intro: Very happy that you can be here with us today.
• 0:45
  Intro: Thank you for joining us.
• 0:46
  Chairman French Hill: Yeah, it's great to be with you and uh really appreciate uh the chance to talk about one of the most important things facing our country, which is making sure we have the right rules and practices for supporting innovation.
• 0:59
  Nik Milanović: No kidding.
• 1:00
  Nik Milanović: And I feel like this has been a longtime passion and focus of yours.
• 1:03
  Nik Milanović: Um I don't know if you remember we first met when uh Ashley Gunn on your staff organized a financial innovation meeting in New York about a decade ago.
• 1:12
  Nik Milanović: Um, and it feels like no matter what the technology has been, you've been squarely on the side of financial innovation in the U.S.
• 1:19
  Nik Milanović: for a long time now.
• 1:20
  Nik Milanović: It's very much appreciated.
• 1:22
  Chairman French Hill: Well, it's so important all during my career, uh going back uh literally almost almost five decades.
• 1:30
  Chairman French Hill: Technology has been something I've been focused on and how we use technology to better serve customers, attract customers, uh, and uh build revenue through new channels.
• 1:41
  Chairman French Hill: And so that's was a it was a uh exciting for me to see moving uh analog uh intermediated functions that have been digitized and have improved and costs have fallen and services increased, but move those to a decentralized blockchain in certain applications, which even increases the flexibility, lowers the agency costs, has more profitability uh opportunities, I think, for uh the industry to provide more services, and certainly gives consumers a lot of choice and convenience.
• 2:17
  Chairman French Hill: So it's you're right.
• 2:19
  Chairman French Hill: It's been a decade since we we met.
• 2:21
  Chairman French Hill: We uh I was very involved uh when Maxine Waters was the committee chair back during the Libra days and back due during the International Monetary Fund, the IMF, arguing that every country needed to have a central bank-issued digital currency.
• 2:38
  Chairman French Hill: And that so it wasn't that long ago.
• 2:41
  Chairman French Hill: And so you and I have seen a tremendous amount of change, for the most part, uh in the right direction, notwithstanding the sort of road bumps I would argue during the Biden administration on weaponizing the regulatory system against innovation, uh, not universally, but enough that people were spending more money on legal fees than they were innovation.
• 3:06
  Nik Milanović: Well, it's refreshing to hear that from a legislator.
• 3:08
  Nik Milanović: You know, we spent a lot of time at the conference on this platform talking with technologists, but hearing such a uh pro-innovation perspective from a legislator and chairman of the House Financial Services Committee really means a lot.
• 3:21
  Nik Milanović: And I think that this industry has taken note.
• 3:23
  Nik Milanović: You know, we're speaking in the uh summer of 2026, just as your committee is trying to get clarity across the finish line in the Senate.
• 3:29
  Nik Milanović: So before we get into the bigger picture, I'd love to just define where we are in the moment.
• 3:34
  Nik Milanović: You mentioned, you know, we have a little bit of whiplash from a mixed approach to financial innovation in the U.S.
• 3:42
  Nik Milanović: over the last decade.
• 3:43
  Nik Milanović: It's been about a year now since the Genius Act passed into law.
• 3:46
  Nik Milanović: Where are we on the adoption curve at the moment?
• 3:49
  Nik Milanović: And is it tracking with where in uh is it tracking with where you expected to be when you first signed the Genius Act?
• 3:56
  Chairman French Hill: That's a great question.
• 3:56
  Chairman French Hill: In my judgment, yes.
• 3:58
  Chairman French Hill: Uh, but let me give some perspective.
• 4:00
  Chairman French Hill: First of all, we're headed to uh New York this afternoon as we taped this uh uh to do a field hearing on the benefits of the Genius Act and the need for clarity.
• 4:12
  Chairman French Hill: And so uh commiserate with the one-year anniversary, effectively, of signing Genius into law and the House passing the market framework legislation in this Congress called the Clarity Act.
• 4:23
  Chairman French Hill: 78 Democrats joined us.
• 4:25
  Chairman French Hill: It was a very bipartisan effort, pro-innovation.
• 4:28
  Chairman French Hill: And so we're celebrating that one-year anniversary.
• 4:32
  Chairman French Hill: But if you think about it in the context of adoption, that's so key.
• 4:36
  Chairman French Hill: Uh let, you know, almost the arguments are very different last summer than this summer.
• 4:41
  Chairman French Hill: You still have the ethics issue that we can talk about and um maybe some other aspects containing uh the yield issue around uh dollar back stable coins between the banking industry and the sum, not all, but some in the exchange and dollar back stablecoin industry.
• 5:01
  Chairman French Hill: But you know what has not uh been as big an issue as it was last spring is the whole issue of acceptance of tokenization of assets on a blockchain.
• 5:12
  Chairman French Hill: So something that last year's debate we were like talking prospectively about.
• 5:18
  Chairman French Hill: We've seen significant in-pilot form testing by some of the biggest companies in the world on tokenization and running parallel systems.
• 5:29
  Chairman French Hill: So my point by saying that, Nick, is I think that uh adoption is moving ahead quickly with this better regulatory legislative environment, even if we don't have every I dotted and T crossed.
• 5:43
  Chairman French Hill: So that just means that once again, technology marches on if the environment is embracing of it.
• 5:49
  Chairman French Hill: And it tells me also uh that it's passing the PL test, the profit and loss test that companies see.
• 5:56
  Chairman French Hill: No, I we see that technology is advanced where we can integrate an interoperable system here, and we are seeing the benefits in select product categories and select instances of where moving from you know an analog, albeit digitized system, to a uh a blockchain system has real benefits.
• 6:16
  Chairman French Hill: So I'm excited about where we are.
• 6:18
  Chairman French Hill: I'm disappointed we don't have clarity uh framework into law through the Senate yet.
• 6:24
  Chairman French Hill: But in terms of what's happening sub rosa to that out in the industry, I'm very pleased what up with what I've seen.
• 6:31
  Nik Milanović: I think it's you're you're hitting on an interesting point, which is it's particularly interesting where the demand is coming from in the market at the moment.
• 6:40
  Nik Milanović: You're no longer really just hearing about tokenized assets from crypto firms and entrepreneurs.
• 6:45
  Nik Milanović: You're hearing about it from everything from bulge bracket banks down to community banks.
• 6:51
  Nik Milanović: Um and something of note we uh mentioned in the introduction is that you spent two decades as a uh community banker yourself before Congress.
• 6:59
  Nik Milanović: You ran a bank, you worked with the community, you understand what consumers needed, what financing was required in order to keep that community moving and provide a better access to financial liquidity and quality of life in Arkansas.
• 7:13
  Nik Milanović: I'm curious when you talk now with bank CEOs about what genius means for their deposit base or for their business model, what sort of reactions are you hearing?
• 7:23
  Chairman French Hill: Well, I'll be candid.
• 7:24
  Chairman French Hill: I mean, that's a controversial topic with uh some bankers.
• 7:27
  Chairman French Hill: Um in my view, I'll I'll give you my personal view in a second, but let me set set the stage.
• 7:34
  Chairman French Hill: I mean, the Treasury Department uh released a study, and I can't recall at this moment who prepared the study, what the assumptions were in the study, what authoritative basis uh was in existence for it, and all that background.
• 7:50
  Chairman French Hill: But the implication was that you could potentially see significant conversion of uh normal consumer and business deposits to a dollar-backed stable coin.
• 8:02
  Chairman French Hill: So that information, uh, you know, either prepared or caused to be prepared by the Treasury Department, has crafted a very firm and negative view for a lot of bankers.
• 8:13
  Chairman French Hill: That's my point.
• 8:14
  Chairman French Hill: Like if that study didn't exist, I'm not sure that the mood on the ground or polling of customers or actually the uh reality of the world would have been so hard and fast.
• 8:29
  Chairman French Hill: Here's my point.
• 8:30
  Chairman French Hill: I think as you're seeing tokenization of deposits, uh and I can now debit cash and make a payment on a blockchain using my deposit account, which is not unlike me informing the bank, I'd like you to set up an ACH payment for me routinely, uh transferring this money from one account to the other and making this payment monthly.
• 8:54
  Chairman French Hill: That's using the automated clearinghouse system, it's automated, but it is a, you know, it's a it's not a fancy or upscale transaction, and certainly not on a blockchain.
• 9:03
  Chairman French Hill: Or using Fedwire, I want you to wire this money once a month on this date.
• 9:07
  Chairman French Hill: Here's the wire verification process.
• 9:10
  Chairman French Hill: Now, if I can debit my account and pay in a blockchain rail through a tokenized deposit, you tell me why I need interoperability with a dollar-back payment stable coin.
• 9:23
  Chairman French Hill: So then I think you see the uses narrow a bit to cross border or in a crypto-related environment that's fully crypto and everybody engaged in it is engaging in the blockchain.
• 9:38
  Chairman French Hill: There may be multi businesses, uh, multi-consumers, maybe multi-countries.
• 9:45
  Chairman French Hill: And so the agreement is we want to settle in a you know dollar-back payment stable coin.
• 9:49
  Chairman French Hill: You get you get my point.
• 9:51
  Chairman French Hill: So the innovation of deposit tokenization, I think, changes this discussion.
• 9:55
  Chairman French Hill: So that's my principal point I make.
• 9:57
  Chairman French Hill: Secondly, in the House and Senate, on a bipartisan, bicameral basis, we did not in any way, shape, or form craft a dollar-backed payment stable coin as a substitute for a deposit.
• 10:12
  Chairman French Hill: It's not FDIC insured.
• 10:15
  Chairman French Hill: Uh, it is a general liability of a private company that uh once Genius is fully implemented, has certain disclosure and auditing standards and capital standards about how the liquidity for that stable coin is invested, U.S.
• 10:32
  Chairman French Hill: Treasuries and U.S.
• 10:34
  Chairman French Hill: bank deposits, for example.
• 10:37
  Chairman French Hill: But it it wasn't meant to be a transactional replacement for a deposit.
• 10:42
  Chairman French Hill: It's meant to be a payment token, albeit a very secure one, uh, that really has benefits in cross-border arrangements and in other countries who want to have the safety, security, and store of value of the U.S.
• 10:58
  Chairman French Hill: dollar.
• 10:58
  Chairman French Hill: But for Joe Domestic Company or Joe Domestic Household who may want to make a payment on a blockchain, if I can tokenize deposits, I think that's the easy course of action with less friction.
• 11:12
  Chairman French Hill: Um I say all that's a long answer, but that is just gives you my perspective that I don't think we should be fighting as vigorously about this yield issue as I've witnessed in the recent weeks.
• 11:24
  Chairman French Hill: But I wanted you to just have my perspective on it.
• 11:27
  Nik Milanović: I think that you're highlighting an important nuance in the distinction between tokenized deposits and stable coins.
• 11:34
  Nik Milanović: And it's a nuance that gets lost in the conversation a lot.
• 11:37
  Nik Milanović: Um, there's a lot of uncertainty about the role that stable coins will take in the financial services ecosystem.
• 11:42
  Nik Milanović: And I think that that leads to some fear about deposit flight.
• 11:45
  Nik Milanović: You can envision another world where banks actually become a core user of stable coins.
• 11:50
  Nik Milanović: You have demand deposit accounts, but you're able to facilitate a mortgage payment that sells instantly rather than waiting for ACH overnight because that bank is using stable coins and the end user has a law that can receive it.
• 12:02
  Nik Milanović: And so rather than becoming a substitute for deposits, it allows banks to provide better service offering for their end customers using the deposits they already store.
• 12:10
  Nik Milanović: Um, America is rather unique in how its consumer banking and financial services system is set up, in that banks really can play kind of a deputized role in supporting American financial health and enacting uh federal financial policy.
• 12:30
  Nik Milanović: Banks provide a lot of small business lending, working through programs such as the SBA.
• 12:35
  Nik Milanović: Uh they work with the USDA uh farm service agency for agricultural lending, and they play a really important role in community financial development.
• 12:45
  Nik Milanović: I think another anxiety maybe is that um stable coins like big banks look more like tech companies where you really get one or two providers that work on a national and federal basis, and you might lose some of the local context that's necessary.
• 13:02
  Nik Milanović: If you're working in Little Rock, you understand the needs of the community, you understand what small businesses, what farms are working there, why they're important to the community, why they're important to economic development and growth.
• 13:11
  Nik Milanović: I'm curious, how do we um enable a stablecoin regulatory ecosystem through Clarity and Genius that allows community financial institutions to better leverage this new technology in order to serve the very bespoke needs of their own communities?
• 13:26
  Chairman French Hill: Yeah.
• 13:27
  Chairman French Hill: Well, first, I mean, um, if you're a crypto exchange and you think everybody should do everything at an exchange and everything should settle in a stable point, well, get ready to be regulated like a bank.
• 13:39
  Chairman French Hill: Yeah.
• 13:40
  Chairman French Hill: No, but I mean, you're gonna now have a community reinvestment obligation, you're gonna have a loan-to-deposit ratio, you're going to end up being a bank, which is fully permitted under our laws.
• 13:53
  Chairman French Hill: You're not gonna be a payment device while people trade crypto tokens on your exchange as your only business.
• 14:00
  Chairman French Hill: You're stepping beyond that mission set, and you're gonna drag along with it a lot, in my opinion.
• 14:08
  Chairman French Hill: My I'm not practicing law, but in my opinion, you're gonna drag along a lot of obligations that I'm not sure you're you want.
• 14:15
  Chairman French Hill: And so I believe that community banks will be able to integrate uh stable coins into their cash management system for their customers by a stable coin offered by an upstream bank, or they might want to partner with an existing U.S.-based Genius compliant uh stable coin, or they may have a stable coin through their core processor, Pfizer or FIS or Jack Henry might perform that.
• 14:43
  Chairman French Hill: And it becomes integrated into their cash management system.
• 14:46
  Chairman French Hill: It is not eating at deposits.
• 14:49
  Chairman French Hill: We're debiting cash, crediting stable coin to do something, and then we're debiting stable coin and crediting cash because it's FDIC insured, it does pay an effective interest rate, and it doesn't have some general liability risk that in theory, if you're a corporate treasurer, uh a stable coin does.
• 15:09
  Chairman French Hill: So I see it uh, and then I, as I say, in my example about tokenized deposits, I see them on a blockchain fully tokenized 24-7, uh, but there's no intermediate step over to a stable coin.
• 15:24
  Chairman French Hill: That's that's my point there.
• 15:26
  Chairman French Hill: So I think you're gonna see innovation take off and flourish.
• 15:29
  Chairman French Hill: What Congress wants is that non-bank and bank stablecoin issuers have the same rules, same capital, same compliance, same obligations.
• 15:39
  Chairman French Hill: And that includes in sales practices, which is why I've always argued on this debate about uh using a dollar-backed stablecoin as a reward feature for an exchange or whatever.
• 15:52
  Chairman French Hill: Uh the Treasury rulemaking could equalize this, just like in broker dealer, SEC and FINRO rules level the playing field of sales practices between various kinds of brokers.
• 16:07
  Chairman French Hill: So we're on the cusp of this innovation, but it's why, Nick, we need both genius and clarity.
• 16:14
  Chairman French Hill: You can't have one without the other.
• 16:17
  Chairman French Hill: You can't fully see fulfillment of the idea of a dollar-backed stable coin without the uh full market framework legislation put in place.
• 16:28
  Nik Milanović: And then as an output to those two acts, we need thoughtful, clear-eyed rulemaking by the credential regulators as well.
• 16:36
  Chairman French Hill: No doubt.
• 16:36
  Chairman French Hill: And you know, this is really important because something I think probably your listeners talk about among themselves or post about is well, gosh, if you know if you don't pass clarity, that's fine.
• 16:48
  Chairman French Hill: Paul Atkins and Mike Sealer can just do rulemakings and achieve the same thing.
• 16:52
  Chairman French Hill: Well, guess what?
• 16:53
  Chairman French Hill: They can't.
• 16:54
  Chairman French Hill: It takes a law change to uh handle uh Bitcoin, uh, for example, and it takes funding for the CFTC to implement anything connected to uh blockchain commodity-based tokens, which I believe most tokens will end up being treated in that format.
• 17:15
  Chairman French Hill: And they don't have the funding or the personnel to do it, which means they have to go through the appropriations and authorizing process, which we put in clarity.
• 17:24
  Chairman French Hill: House uh Agriculture Committee, House Financial Service Committee last July put the funding feature for the CFTC in the bill.
• 17:33
  Chairman French Hill: And of course, it's gone to the Senate.
• 17:34
  Chairman French Hill: The Senate knows that, and that's why uh getting a legislative solution is the permanent, uh, the permanent way to get this framework in place and not have a bunch of seesaw or half half-done measures.
• 17:49
  Nik Milanović: That's uh yes, I think we've seen that there's administrative whiplash that's more pronounced at the agencies than anywhere else.
• 17:56
  Nik Milanović: And so if you're thinking about whether a Citibank or a Bank of America or JP Morgan Chase can actually um leverage stable coins to provide a better end service to their customers, well, if there isn't a law in place, they can't really depend on rulemaking because the rulemaking might not actually last longer than a couple of years.
• 18:12
  Nik Milanović: Um I noticed that you've highlighted tokenization as the committee's next major agenda item after stablecoins and market structure.
• 18:21
  Nik Milanović: I uh appreciate the foresight that shows.
• 18:23
  Nik Milanović: It looks like you're kind of looking down the garden path.
• 18:25
  Nik Milanović: When we tokenize the base layer for financial services, money, there's a lot that you can build on top of that.
• 18:31
  Nik Milanović: I'd love it if you could just talk our readers through uh the next natural step and what would change for markets beyond payments focused on tokenization.
• 18:39
  Chairman French Hill: Right.
• 18:40
  Chairman French Hill: Well, that's as I said a few minutes ago, that's why I think it's one of the single biggest changes from the legislative environment last summer versus this summer, because of entities who are who are assuming base labor level tokenization and are writing the applications to take full advantage of that, whether it's securities or real-world, real-world non-asset non-security assets.
• 19:09
  Chairman French Hill: I just see this as having such major ramifications for uh service, uh cost reduction, uh compliance ease, compliance certainty, uh, even better illicit finance and fraud prevention by virtue of this.
• 19:27
  Chairman French Hill: So where I've spent most of my time on the committee is in our jurisdiction.
• 19:31
  Chairman French Hill: I mean, we're focused uh quite seriously on that commodity or security-based token process, and we've watched with interest uh DTCC's uh parallel work on settlement on a blockchain for securities transactions, the debate around we want it to be a real security, you know, with all the ramifications that a share of Apple stock is a share of Apple stock on DTC settlement in street name, and a share of Apple stock settled in a blockchain ATS type system is still a share of Apple stock with the precisely the same characteristics.
• 20:11
  Chairman French Hill: Because to me, to I don't want to get in, this is again speaking personally, not speaking on behalf of the committee.
• 20:18
  Chairman French Hill: I don't want another like American depository receipts approach to, you know, liquid stocks.
• 20:25
  Chairman French Hill: That seems crazy to me.
• 20:26
  Chairman French Hill: I mean, ADRs were a very interesting innovation in the late 70s, early 80s to let Americans go invest abroad, for example, but you don't get the corporate governance, you don't get the dividend pass-through.
• 20:38
  Chairman French Hill: It's a it's a very approximate proxy of that uh asset.
• 20:44
  Chairman French Hill: So the purity of doing this and experimenting on parallel systems on settling on blockchain, I think is so interesting.
• 20:51
  Chairman French Hill: Secondly, you've seen the bigger banks uh test settling on a blockchain in tokenized deposits, uh, which is another issue the committee has watched very closely.
• 21:04
  Chairman French Hill: But there are many other elements from real estate transactions to uh settling uh mortgage-backed securities.
• 21:12
  Chairman French Hill: I think in fixed income it has tremendous benefits because fixed income is uh needs better liquidity, uh less frequent, not the treasury market, but there are many forms of fixed income that are fewer, uh fewer trades per day, and it's expensive to do the trade and the spreads are wide.
• 21:32
  Chairman French Hill: And so you just I'm just so excited about that.
• 21:36
  Chairman French Hill: And what we'll do is a series of hearings on this, exposing it inside the financial services space about what should we be taking, and that'll allow the regulators to come in and testify, the private sector to see what modifications we might need to make going forward or enhancements to base text, which is what I call the Clarity Act.
• 21:57
  Nik Milanović: You know, we've been talking a lot about the domestic.
• 21:59
  Nik Milanović: Use case and landscape for stable coins, but there's also a consideration about American international financial competitiveness and continue to remain ahead of the curve.
• 22:10
  Nik Milanović: What we've seen, especially in a hostile environment to innovation where you don't have clear legislation, is a lot of that innovation gets pushed offshore.
• 22:20
  Nik Milanović: And consumers can get exposed to potentially dangerous, unregulated shadow banking because they don't have the option to participate in that in an onshore venue.
• 22:31
  Nik Milanović: There's also a question about how we continue to be an attractive destination for the world to come to the best financial services ecosystem in terms of what they're able to get.
• 22:41
  Nik Milanović: The variety of products, the strongest, the strength and security of those products, and the competitiveness of the American financial services ecosystem.
• 22:50
  Nik Milanović: How do you think about stable coins in the context of keeping America globally competitive?
• 22:57
  Chairman French Hill: Super important, but perhaps the most fundamental at a street level thinking contribution they make.
• 23:04
  Chairman French Hill: And what we try to do at Genius was level that playing field for the innovation to have stability here under U.S.
• 23:14
  Chairman French Hill: law, because people want to be in the dollar, but they want the benefits of the dollar in a U.S.
• 23:20
  Chairman French Hill: court, in our rule of law system, our regulatory system, our certainty, our transparency of our tax system.
• 23:28
  Chairman French Hill: And if they don't, uh if they're interested in illicit finance and uh shadow market activity, well then you know they can do that outside the U.S., uh away from jurisdiction.
• 23:41
  Chairman French Hill: Uh and they can do that today in trade-based money laundering, repackaging cigarettes they've stolen, using the I'll say billions of dollars of hundred dollar bills, Benjamin Franklin's, that are out floating around the world out there.
• 23:57
  Chairman French Hill: And so we reduce illicit finance by compelling things onto the blockchain because we have a much better chance of tracking it and uh interdicting it than we do if you're roaming around uh with pallets of illegal cigarettes or just cash or some Hawala system.
• 24:13
  Chairman French Hill: So I think you get better illicit finance oversight outside the U.S.
• 24:17
  Chairman French Hill: among allies with the dollar-backed stable coin.
• 24:21
  Chairman French Hill: And you offer a real benefit to countries with instable or unstable uh economic systems, uh local currency, uh currency controls, where uh an old-world idea like I experienced when I was uh in Vanderbilt and in economics and specializing uh for several of those college years in Latin American economics, where people would keep America signed uh one-sided signed American Express travelers checks in their lockbox in Buenos Aires or uh Rio de Janeiro as their store of value money that they would convert uh cruceros or pesos or whatever into the dollar that way, not paying interest, of course.
• 25:10
  Chairman French Hill: This gets back to my point about dollar-back stable coins or a tokenized form of that old-fashioned 1968 uh American Express Travelers checks in that logbox.
• 25:22
  Chairman French Hill: And then they run a parallel.
• 25:24
  Chairman French Hill: They have their peso account accessed by maybe a Visa card, and they have their uh their dollar back stablecoin account also accessed by a piece of plastic, probably issued in their in their home country, or they can use a QR code on their smartphone.
• 25:38
  Chairman French Hill: And it really facilitates uh greater economic growth, I think, in an instable, in a less stable country, because that dollar uh portion of their liquidity that's in a dollar-backed stable coin can be used for them to advance economic uh you know, creation in their own home country.
• 26:00
  Chairman French Hill: So I view it as a real extension to the dollar at the street level, buying cigarettes or buying a business.
• 26:07
  Chairman French Hill: I view it as a way to uh keep the money out in a formal system that is better for uh those of us concerned about terror finance or illicit finance or drug cartel manipulation.
• 26:21
  Chairman French Hill: I really do.
• 26:22
  Chairman French Hill: So I do think it's a key part of that dollarization of the of the world out there, but in a much more uh you know effective, transparent way.
• 26:32
  Nik Milanović: You know, when we talk about dollarization, normally we're talking about uh central bank dollarization and uh trade balances.
• 26:39
  Nik Milanović: But it's interesting, digital dollars are really going to, I think, expose over the next decade just how much latent demand there is for a currency that's issued by a country that focuses on fiscal responsibility and a sound legal system in order to ensure that that currency remains stable, unlike a lot of the currencies that you mentioned, especially over the uh in a period of the lapse in Latin America and the uh 80s and 90s, where we saw a lot of currency volatility.
• 27:07
  Nik Milanović: It seems like there's a lot of latent international demand that we're gonna see come through stable coins.
• 27:13
  Nik Milanović: Um, I would be remiss not to mention it's July 16th today, the 21st century Road to Housing Act officially became law last week.
• 27:23
  Nik Milanović: Congratulations.
• 27:24
  Nik Milanović: I know that you were a key champion of the bill, um, in some way very related here, because what we're talking about at the end of the day is um American household financial stability, access to the American dream, and economic security.
• 27:37
  Nik Milanović: Uh I'm curious, you know, why was that bill so meaningful to you and what comes next?
• 27:42
  Chairman French Hill: Well, it was a goal that uh Senator Tim Scott from South Carolina, who chairs the Senate Banking Committee, and uh it's a goal that the two of us had in the previous Congress, that if we were lucky enough to be elected as our respective chairs of the financial services committees in the two chambers, we wanted to make uh supply-side housing reform a real priority.
• 28:03
  Chairman French Hill: And it falls into several pieces.
• 28:06
  Chairman French Hill: First, let's cut red tape and bureaucracy and junk around the HUD programs that raise the cost per square foot of HUD programs.
• 28:13
  Chairman French Hill: Secondly, let's change the zoning rules and give incentives to cities and local governments to lower the cost of building housing by uh encouraging them to have different kinds of density, different kinds of units.
• 28:28
  Chairman French Hill: Uh we removed the 1974 requirements that work against a manufactured home product or a modular construction product where you get better resiliency, better energy efficiency.
• 28:41
  Chairman French Hill: And one of the simplest parts of that, it sounds insane, is they no longer require to have a chassis in a manufactured home.
• 28:50
  Chairman French Hill: So Berkshire Hathaway owns Clayton homes.
• 28:52
  Chairman French Hill: Clayton homes build manufactured homes, very attractive.
• 28:55
  Chairman French Hill: You've seen them online, you've seen them in person.
• 28:58
  Chairman French Hill: Those are all forced by the HUD code from the mid-1970s to have a chassis built into them.
• 29:04
  Chairman French Hill: The estimate is $10,000 or $12,000 of a unit that's probably between 80 and $120.
• 29:11
  Chairman French Hill: I'm a little out of date on this, but you know, $80,000 to $120,000 is required to be, we've relieved that.
• 29:18
  Chairman French Hill: So we've removed NEPA environmental reforms for a city to build a house using home funds.
• 29:25
  Chairman French Hill: We have hold we're holding HUD accountable by making the HUD Secretary testify.
• 29:29
  Chairman French Hill: I think HUD needs a lot more accountability.
• 29:31
  Chairman French Hill: I think our tenants and people dependent on HUD programs need more accountability.
• 29:36
  Chairman French Hill: We free up community banks because our banks under $10 billion make six out of 10 home construction loans across this country.
• 29:44
  Chairman French Hill: 60% of home construction loans are made by banks under $10 billion.
• 29:48
  Chairman French Hill: So we help them raise deposits through our policies in this bill.
• 29:52
  Chairman French Hill: We help them lower their compliance costs.
• 29:55
  Chairman French Hill: We make it easier to start a de novo bank.
• 29:58
  Chairman French Hill: And then finally, we have more incentives to build like this.
• 30:04
  Chairman French Hill: We let bank holding companies go from 15 to 20 percent in their public welfare investments in community development, which means they could buy low-income tax credits from a low-income tax credit working home developer.
• 30:18
  Chairman French Hill: We let the CDBG money, community development block grant money that the cities get to be used for infrastructure in building one to four family houses.
• 30:27
  Chairman French Hill: So it's a good set of bills that will, in my judgment, at the lower the marginal cost of building homes, create more incentive to creativity, and lowering uh, I'd say, bad local government decisions about housing.
• 30:42
  Chairman French Hill: So it's a good bill, uh overwhelming support in the House and Senate.
• 30:46
  Chairman French Hill: Proud that it's law.
• 30:49
  Nik Milanović: Well, congratulations, Chairman.
• 30:50
  Nik Milanović: I know that you fought very hard for that bill, and I'm glad for the American consumer that affordable housing is a little bit more in reach and that you've been very busy, that you're coming from a few votes today.
• 31:00
  Nik Milanović: I couldn't be more excited to see what we can expect from the House Financial Services Committee over the next year.
• 31:05
  Nik Milanović: Thank you so much for taking some time to join us today.
• 31:07
  Chairman French Hill: Great to be with you, Nick.
• 31:08
  Chairman French Hill: Thanks for the invite.
• 31:09
  Chairman French Hill: Thank you very much.