In a recent testimony before the House Financial Services Committee, Federal Reserve Chair Jerome Powell emphasized the importance of central bank involvement in the approval and regulation of payment stablecoins. Powell argued that these digital currencies should be considered a form of money and called for strong central-bank oversight to ensure their credibility and stability.
The Need for Central Bank Approval:
During the hearing, Powell expressed his belief that central banks should play a pivotal role in approving the issuance of payment stablecoins. He stressed that in advanced economies, the central bank serves as the ultimate source of credibility for money. By granting approval and exercising oversight, the central bank can help maintain trust and ensure the stability of the financial system.
Advocating Robust Federal Role:
Powell further argued for a robust federal role in the regulation of stablecoins. He asserted that it would be appropriate to have a comprehensive framework that sets clear guidelines and standards for stablecoin operations. By doing so, the government can address potential risks associated with these digital currencies, safeguard consumer protection, and maintain the overall integrity of the market.
The House Financial Services Committee, led by Chairman Patrick McHenry, is scheduled to mark up two crypto bills in late July. One of the bills focuses specifically on stablecoin legislation, addressing the need for regulatory measures to govern their issuance and operation. The second bill takes a broader approach, aiming to establish a comprehensive market structure and oversight framework for cryptocurrencies in the United States. These upcoming legislations hold significant implications for the future of stablecoins and the overall cryptocurrency landscape.