The president of the US Federal Reserve, Jerome Powell, said he has no intention of banning cryptocurrencies. But he does advocate more regulation, especially for stablecoins.
He said this during a speech to the House Committee on Financial Services.
While it was never likely that the US government would completely ban cryptocurrencies, the comment will still bring a sigh of relief to investors. Finally, some positive news from regulators, if only a confirmation of the status quo.
The Fed chairman was asked by Republican Theodore Budd whether he would ban cryptocurrencies or at least restrict their use. Powell said No and that he had no intention of banning them.
Chairman of the Federal Reserve, “We have no intent to ban cryptocurrency”pic.twitter.com/OasIksRODd
— Documenting Bitcoin 📄 (@DocumentingBTC) September 30, 2021
Regarding stablecoins, he said: ‘they fall outside the regulatory scope to some extent, and it is appropriate that they be regulated. Same activity, same regulations.’
Impact on the economy
The US Treasury Secretary, Janet Yellen, was also present. In the past, it has often expressed a negative view of the cryptocurrency market. She does a lot of research into the possible effects of cryptocurrencies and stablecoins on the economy. But right now, she has other things on her mind, like convincing Republicans to raise the debt ceiling.
Powell was also a guest on the American program 60 Minutes. He then discussed the possibility of a digital dollar, the central bank’s crypto. He was enthusiastic, but doesn’t necessarily have to be the first, he wants the US to do it well rather than quickly.
Back to his speech to the House Committee on Financial Services. The timing is interesting, because at the moment, US regulators are putting a lot of resources into developing a regulatory framework. Think of parties such as the Securities and Exchange Commission (SEC), the US Treasury Department and the Office of the Comptroller of the Currency.
These authorities have made various statements, sometimes contradictory, but the general sense is that they want to introduce measures to protect investors, prevent market manipulation and safeguard the sovereignty of the US dollar. Throw a sauce of anti-terrorist financing and anti-money laundering over it and politicians get excited.
It is striking that there is a lot of attention for stablecoins, still a potential competitor for a future digital dollar. This could suggest that there will be more regulation in the short term, although no one knows when. If you read this article in the pub with a glass that is half full, you could say that these new rules will open the door to cryptocurrency-based ETFs.