Jerome Powell, the United States Federal Reserve chair, has recently stated that he expected the government agency to monitor developments in the cryptocurrency industry, but he didn’t see digital currencies as a financial stability concern for United States markets.
Powell showed his support for the conclusion of a report from the President’s Working Group on Financial Markets released on 1st November 2021. In the report, it’s proposed that issuers of stablecoin should be subject to appropriate federal oversight such as that of banks.
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Jerome Powell noted:
“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…
“You could have a payment network that was immediately systemically important that didn’t have appropriate regulation and protections. The public relies on the government and the Fed in particular to make sure that the payment system is safe and reliable.”
Although the Fed chair stated that cryptocurrency is currently not a threat to the United States’ financial stability, he’s still of the opinion that crypto is used as speculative assets. He still believes that crypto is risky and backed by nothing.
Back in September, he voiced the need for regulation of stablecoins, adding that he wouldn’t be in favor of an outright ban of digital assets like China.
Back in September Powell said:
“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.”
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