Federal Reserve Chairman Jerome Powell indicated during a House Financial Services Committee hearing that he has no plans to prohibit or restrict the use of cryptocurrencies. Additionally, he made a comment about stablecoin regulation.
Jerome Powell, chairman of the Federal Reserve Board of Governors, discussed cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs) during a House Financial Services Committee hearing on Thursday. The meeting’s primary focus, however, was on the responses of the Federal Reserve and Treasury to the Covid-19 outbreak. Janet Yellen, Treasury Secretary, spoke on behalf of the Department of the Treasury.
Congressman Ted Budd of North Carolina stated to Powell, “During a July hearing before this committee, you were asked about CBDCs or central bank digital currencies and their impact on stablecoins and other cryptocurrencies, and you stated, ‘You wouldn’t need stablecoins or cryptocurrencies if there was a digital US currency.'” Continuing, Rep. Budd:
So Mr. Chairman, as a matter of policy, is it your intention to ban or limit the use of cryptocurrencies like we are seeing in China.
Powell said instantly, “No.” The Fed chairman immediately followed up his response with an admission that he “misspoke” earlier when he stated, “you wouldn’t need cryptocurrencies.” “Remove the term cryptocurrency from that sentence,” Powell continued.
Rep. Budd felt that Powell’s response about the cryptocurrency ban was insufficiently clear, and so he re-asked. “However, there are no plans to prohibit?” Powell stated unequivocally that there are no plans to outlaw cryptocurrency.
The chairman of the Federal Reserve then discussed stablecoins, stating: Similar to money market funds, stablecoins are a form of digital currency. They are similar to bank deposits, although they fall outside the regulatory parameters to some extent, and it is reasonable for them to be governed similarly to bank deposits; same activity, same regulation.
According to a story in Friday’s Wall Street Journal, the Biden administration is considering regulating stablecoin issuers as banks.
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