Jerome Powell, the United States’ Federal Reserve Chairman believes regulation of the cryptocurrency market is critical, but the bank has no intention to outrightly ban Bitcoin (BTC) or other digital currencies.
Powell clarified that a China-style ban on digital assets isn’t something he’s considering when he responded to a question from Republican Representative, Ted Budd. Rep. Budd asked about safety regulations for stablecoins and about the central bank’s ongoing discussions about a so-called “digital dollar” in response to Powell’s comments.
Despite being similar to money market funds and to bank deposits, stablecoins are outside the regulatory perimeter, “it is necessary for them to be regulated,” Powell said while adding that “the same rule applies to the same activity.”
Although the Fed has been considering a central bank digital currency for a while, policymakers are still undecided about its implementation. A number of studies have been commissioned by the central bank about the advantages and potential roadblocks of issuing a CBDC.
Powell is the chairman of the Federal Open Market Committee, which is responsible for determining US monetary policy.
The Committee decided earlier this month to leave existing stimulus programs intact while signalling a possible wind-down of the COVID-19-induced bond purchase program. Stocks and crypto assets are among the risk assets that appear to have been impacted by the warning.
Powell had earlier said the Fed wasn’t in a rush to join the trend, despite several central banks launching their own CBDCs.
Managing by getting things right, rather than speed, is the focus for the Fed Chair while noting that the US does not lag behind other OECD countries in CBDC innovation.
Government policymakers are pushing an anti-crypto narrative that features CBDCs at the forefront.