Jerome Powell, the chairman of the U.S. Federal Reserve, claims that the U.S. does not intend to ban crypto. At the same time, he also exclaims that stablecoins need greater regulatory oversight.

Powell made these announcements in a house Financial Services Committee meeting that lasted for two hours this week. The conference is held as a forum for representatives to ask Powell and Treasury Secretary Janet Yellen about the Treasury Department’s and Federal Reserve’s pandemic response. This meeting also featured several questions about cryptocurrencies.

Republican Senator Ted Budd is a longtime proponent of crypto and a member of the Congressional Blockchain Caucus. He had asked Powell to clarify the statements that he had made during a July hearing. The statement was regarding the development of a U.S. central bank digital currency (CBDC) that could undercut the need for private crypto and stablecoins.

Ted asked Powell directly if or not he intended to limit or ban the use of cryptocurrencies.  Powell firmly responded with a “No.” Fed chairman said, “[I have] no intention to ban them,”

Powell's comments came two days after he asked Congress for some counsel and administrative help to foster the digital dollar. Some people from the crypto community have hypothesized that the launch of a CBDC in the U.S. would lead to bans on private crypto, just as was seen in China. However, Powell’s remarks suggest otherwise.

Powell compared stablecoins to money market funds or bank deposits and said, “They’re to some extent outside the regulatory perimeter, and it’s appropriate that they be regulated. Same activity, same regulation,” 

Rep. Warren Davidson is a member of the Congressional Blockchain Caucus. He remarked on the lack of regulatory clarity around crypto. He also requested Yellen to define digital assets for tax-accounting purposes.

Rushali Das

CBW - External Analyst

INDIA