Fed Chair Jerome Powell Calls Stablecoins As Money, Says Bitcoin Has Staying Power

While testifying before the House Financial Services Committee on Wednesday, June 21, Federal Reserve chairman Jerome Powell stated that they have been in talks with lawmakers on cryptocurrency regulations and the markup of the same shall come up ahead in the next month of July.

Besides, he also talked about the need for strong central bank oversight in stablecoin regulations. Powell added: "We do 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 believe it would be appropriate to have quite a robust federal role.”

As per Powell, the US central bank staff has been involved in talks with lawmakers from both parties on the matter of crypto legislation. The Fed Chair admitted the fact that cryptocurrencies, like Bitcoin, have holding power.

During the hearing's commencement, Chairman Patrick McHenry (R-N.C.) announced that the panel would be conducting a markup of two cryptocurrency bills in late July. A markup is a public session where discussions and revisions to a bill's specifics take place before it goes for a committee vote. The bills in question include the highly debated stablecoin legislation and a comprehensive bill aimed at establishing regulatory frameworks and oversight for cryptocurrencies in the United States.

During the questioning of Powell, Rep. Maxine Waters (D-Calif.), the ranking Democrat on the committee, expressed concerns about the Republicans' latest legislative proposal. She argued that it would significantly limit the Federal Reserve's powers and emphasized the importance of establishing a robust federal oversight framework for nonbank stablecoin issuers. This has been a contentious issue throughout the negotiations, as Republicans have advocated for a prominent role for states in regulating stablecoins.

Additionally, Powell addresses the debate over whether the US should consider having a central bank digital currency (CBDC). However, Powell added that if the Fed aims to setup a Digital Dollar, the central bank would have no interest in managing the retail accounts. "We would not support accounts at the federal reserve by individuals," he said. He added that the banking system would rather handle such accounts.

During the discussion, Jerome Powell touched upon two key topics: Traditional Finance (TradFi) and inflation. The Fed Chair reaffirmed the central bank's commitment to reducing inflation to the target level of 2%.

Powell also acknowledged the possibility of dedollarisation in the East, emphasizing the significance of maintaining the US Dollar's status as the global reserve currency. However, he did not delve into specific strategies or plans to achieve this objective.