Federal Reserve Chief Jerome Powell stated before the House Financial Services Committee that he does not intend to limit the use of cryptocurrencies or DeFi. He also commented on the regulation of stablecoins which has been controversial digital assets at best.
Powell Says ‘No Intention to Ban’ Crypto
The chairman of the Board of the Federal Reserve System, Jerome Powell, talked about cryptocurrency, stablecoins, and central bank digital currencies (CBDC) during a hearing before the House Financial Services Committee Thursday. The main focus of the hearing, however, was the Federal Reserve’s and Treasury’s responses to the Covid-19 pandemic. Secretary Janet Yellen spoke for the Treasury Department.
U.S. Congressman Ted Budd from North Carolina said to Powell: “In a July hearing before this committee, you were asked about CBDCs or the central bank digital currencies and their impact on stablecoins and other cryptocurrencies, and you stated, ‘You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital U.S. currency.’”
Rep. Budd continued:
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 immediately replied: “No.”
The Fed chairman quickly followed his answer with an admission that he “had misspoken” earlier when he said, “you wouldn’t need cryptocurrencies.” Powell added, “Take the word cryptocurrency out of that sentence.”
Rep. Budd felt that Powell’s reply regarding the banning of cryptocurrencies was not clear enough so he asked again. “But, no intention to ban?” Powell confirmed that there is no intention to ban crypto.
The Fed chair proceeded to talk about stablecoins, stating:
Stablecoins are like money market funds. They’re like bank deposits but they are to some extent outside the regulatory parameter and it’s appropriate that they be regulated, same activity, same regulation.
On Friday, the Wall Street Journal reported the Biden administration is looking to regulate stablecoin issuers as banks. A approach that is applauded by many.