The Federal Reserve Chairman, Jerome Powell, stated in an appearance before the House Financial Services Committee that he sees cryptocurrencies as assets with staying power. “Crypto appears to have ‘staying power’ as an asset class,” he said, while also discussing the current status of interest rates and other US monetary policy issues.
Powell, despite acknowledging the sharp decline in the market last year, spoke positively about crypto and emphasized the need for legislation to guide the digital asset market, particularly cryptocurrencies. He added that Fed staff members have been involved in discussions regarding regulations for the US digital asset market.
Regarding stablecoins, Powell affirmed that while the Fed sees them as a form of money, he emphasized the importance of central banks in regulating such assets. “We believe it would be appropriate to have quite a robust federal role.”
A stablecoin is a cryptocurrency designed to maintain a stable value relative to another asset, such as the US dollar or gold. This makes them more attractive to investors seeking less volatile investments compared to traditional cryptocurrencies like Bitcoin.
US and CBDCs
When discussing the US Central Bank Digital Currency (CBDC) with the House panel led by Chairman Patrick McHenry, Powell stated that having a US CBDC is possible. However, he clarified that the Federal Reserve would not support or manage any retail services related to a digital dollar. “We would not support accounts at the Federal Reserve for individuals,” he said. Instead, the issuance and control of US CBDCs would be carried out through the entire US banking system.
Although the US has been at the forefront of advancing digital asset development worldwide, there have been negative developments in the crypto industry since the end of Q1 2023 and into Q2 2023. For instance, the SEC has sued the two largest crypto exchanges, Binance and Coinbase, for allegedly operating illegally in the US. Additionally, the SEC has faced accusations of not providing clear rules and regulations to manage the industry.
Based on Powell’s remarks, it seems that the US remains interested in crypto, stablecoins, and Bitcoin.