Fed Chair Powell also conceded that cryptocurrencies like Bitcoin have “staying power” in the US economy, taking some by surprise.
The tides of crypto-hostility in the US may at last be turning. Yesterday, Federal Reserve Chair Jerome Powell said at a Capitol Hill semiannual hearing that the Fed views stablecoins as a “form of money“ – a comment which is seemingly at odds with the regulatory landscape in the US over the past six months.
Powell also said that cryptocurrencies like Bitcoin have “staying power” in the US economy in spite of the market cap being lower than it was last year.
Powell’s comments come a few days after BlackRock, the world’s largest asset manager, filed for a Bitcoin spot exchange-traded fund (ETF) on Nasdaq, with others following suit, sending Bitcoin soaring past $30,000.
Crucially, when responding to a question on stablecoins, Powell urged that Federal oversight is necessary.
“We do see payments stablecoins as a form of money, and in all advanced economies, the ultimate source of credibility in money is the central bank,” he said. “We believe that it would be appropriate to have quite a robust federal role in what happens in stablecoins going forward.”
Powell also confirmed that the Fed has been engaging with lawmakers on drafting crypto legislation which is expected to be marked up in July. After eight months of regulatory confusion, major lawsuits and bank collapses, regulatory clarity will be a huge welcome to crypto providers in the States – some of whom have already threatened to move overseas.
On the other side of the Atlantic, the EU has officially enacted MiCA, the world’s first comprehensive crypto legislation, and in the UK, a law regulating stablecoins and other digital assets has received approval from both houses of Parliament.
There are no signs of a CBDC in the near future, though.
When addressing the prospect of a central bank digital currency (CBDC), Powell said “we’re a long way from this”.
He also said that in the event of a CBDC being implemented, the Fed would “not support” accounts by individuals, leaving them to the banking system instead.
Many politicans, including Florida Governor Ron DeSantis, will have breathed a sigh of relief at Powell’s comments. Last month, DeSantis, who is also a Republican candidate for the 2024 Presidential Election, banned CBDCs from the state of Florida, campaigning that they are “Big Brother’s Digital Dollar”.
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