According to US Federal Reserve chair Jerome Powell, cryptocurrencies are not a significant financial stability concern for US markets. However, he has acknowledged the need to regulate stablecoins to protect US investors.
Stablecoins Need Regulations: Powell
Even though Powell acknowledged that developments in the crypto space needed constant monitoring, he expressed his belief that stablecoins especially needed legislation urgently to address risks. The matter came up in a conversation about the report from the President’s Working Group on Financial Markets. When asked by Michael Derby of the Wall Street Journal, Powell agreed with the findings of the report, which concluded that stablecoin issuers needed appropriate federal oversight similar to that of banks.
“Stablecoins can certainly be a useful, efficient consumer-serving part of the financial system if they’re properly regulated. Right now, they aren’t. They have the potential to scale, particularly if they were to be associated with one of the very large tech networks that exist.”
He has also stated that since the public relies on the government and the Federal Reserve to protect its interests, it is especially crucial to ensure that the digital assets payment system is safe and reliable.
US Won’t Follow China’s Crypto Ban: Powell
It is interesting to note that Powell does not believe that cryptocurrencies pose a financial stability concern for the country. However, at the same time, he still acknowledged the risk factor associated with digital currencies. In his opinion, instead of going the extremist route like China and banning all crypto-related activities, implementing structured regulations on stablecoins could bring about a win-win solution for all involved.
Back in September, Powell had explained the need for stablecoin regulation by likening them with bank deposits. He stated,
“Stablecoins are like money market funds, they’re like bank deposits, but they’re, to some extent, outside the regulatory perimeter, and it’s appropriate they be regulated. Same activity, same regulation.”
Crypto Community Hopeful After Powell Renomination
Powell was first appointed to the Federal Reserve by President Donald Trump. Therefore, President Biden’s decision to renominate Powell as Fed Chair till 2026 came as a surprise. Back in October, Powell had thoroughly refuted rumors of the Federal Reserve banning Bitcoin and cryptocurrencies. The confirmation helped clear some of the FUD clouding the market, and there was a noticeable upward trend. Powell’s renomination has given hope to the country’s crypto community, as they anticipate a continuation of his positive stance towards cryptocurrencies.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.