Federal Reserve Chairman Jerome Powell has acknowledged that cryptocurrency appears to have staying power as an asset class in the U.S. economy. In addition, he stated that the central bank views payment stablecoins as a form of money, emphasizing that it would be appropriate to have a robust federal role in what happens in stablecoin regulations going forward.
Powell on Crypto’s Staying Power
Federal Reserve Chairman Jerome Powell answered some questions about cryptocurrency and stablecoins during his testimony before the House Financial Services Committee on Wednesday.
Congressman Warren Davidson (R-OH) stated that crypto currently has a market cap of about $1.1 trillion. He then asked Powell: “Do you acknowledge that this asset class has staying power in the U.S. economy?” The Fed chairman replied:
It appears to have some staying power.
Powell then noted that a year ago the market cap of the crypto market was a lot higher.
Rep. Davidson promptly explained that the crypto market had some “volatility in large measure due to the lack of legal clarity.” He added that the committee aims to change this, noting that several bills are coming out, including one on stablecoins.
The congressman further stated that the U.S. Securities and Exchange Commission (SEC) has been active in the crypto space. He emphasized that the upcoming bills should provide clarity for SEC Chair Gary Gensler as well as Congress and industry participants. Last week, Davidson and House Majority Whip Tom Emmer (R-MN) introduced the SEC Stabilization Act to “restructure the Securities and Exchange Commission and remove Gary Gensler as Chair of the SEC.”
Powell Sees Payment Stablecoins as a Form of Money
Rep. Maxine Waters (D-CA) asked Powell about stablecoins during his testimony. She explained that she and her Republican colleagues have “proposed a stablecoin bill that will create 58 different licenses, with federal regulatory approval over only two of the licenses. The remaining 56 licenses can be issued by each state, territory, and D.C. with little or no federal oversight, regulation, or enforcement.” Powell told the committee:
We do see payment stablecoins as a form of money … We believe that it would be appropriate to have quite a robust federal role in what happens in stablecoins going forward.
“Leaving us with a weak role and allowing a lot of private money creation at the state level would be a mistake,” Powell stressed. He also noted that “In all advanced economies, the ultimate source of credibility in money is the central bank.”
What do you think about Federal Reserve Chairman Jerome Powell acknowledging that crypto has staying power in the U.S. economy and that the Fed sees payment stablecoins as a form of money? Let us know in the comments section below.
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