Powell’s remarks before the Financial Services Committee come amid ongoing debates surrounding the growing adoption of stablecoins as a means of payment.
The US Federal Reserve it views stablecoins as a form of money and felt it has to take a robust role in overseeing it. In this way, Jerome Powell opposes the vision of the President of the Securities and Exchange Commission (SEC). On other occasions, Gary Gensler stated that the stablecoins‘ may require registration, but making it clear that all cryptocurrencies, except bitcoin, can considered only values.
However, Powell claimed: “We see payment stablecoins as a form of money, and in all advanced economies, the ultimate source of credibility in money is the Central Bank. We think it would be appropriate to have a fairly strong federal law [al respecto].
A couple of months ago, the US Congress published a bill to regulate ‘stablecoins’. According to the document, insured depository institutions that wish to issue stablecoins would be under the supervision of the appropriate federal banking agency, while non-bank institutions would be subject to supervision by the Fed.
federal Reserve
“The central bank is and will always be the main source of trust behind the money. Stablecoins essentially borrow that trust from the underlying issuer, and in many cases these are dollar stablecoins, so they’re actually borrowing that trust. These are private forms of money. They will be subject to runs if their reserves are not filled with very high-quality assets, so there is some regulatory work to be done there,” Powell added.
The need to regulate stablecoins
Powell’s statements before the Financial Services Committee come amid the constant debates that exist around the growing adoption of stablecoins as a means of payment, an issue that has been under discussion for several years now among legislators and political representatives in the american nation.
In fact, the vice president of the FED, Lael Brainard, is one of the figures that has expressed caution with these assets, alleging that they cannot enjoy the same protections as fiat money, since “These new forms of money may lose their promised value relative to fiat currency, hurting consumers or, on a large scale, creating broader risks to financial stability.”
Brainard’s statements came to place based on what happened with Terra’s UST and the doubts that weigh on USDT, the stablecoin issued by Tether.
For now, The Financial Services Committee has two cryptocurrency-related bills scheduled for the end of July, which will be submitted for debate and future editions before being voted on by the body.
Source: Ambito
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