Fed Chairman Jerome Powell Says Privately Issued Stablecoins Can Co-Exist With CBDC
The United States central bank aka the Federal Reserve has already initiated some preliminary work on its central bank digital currency (CBDC) aka the Digital Dollar. While the Fed has always thought USD-stablecoins to be a threat to its CBDC, there’s a surprising change in the commentary coming from Fed chairman Jerome Powell.
Earlier on Tuesday, January 10, responding to a question from Sen. Pat Toomey, Powell said that there’s room for central bank digital currencies and the USD-backed stable coins to co-exist together.
Sen. Toomey asked: “If Congress were to authorize and the Fed were to pursue a central bank digital dollar, is there anything about that that ought to preclude a well-regulated, privately issued stable coin from co-existing with a central bank digital dollar?”
Responding to it, Fed Chairman Jerome Powell said: “No, not at all”. This is quite a big change from Powell’s stand a six months back when he said that there’s no need for other digital currencies if the central bank issues its own CBDC aka the Digital Dollar.
Some of the widely used stable coins used in the U.S. markets are Tether’s USDT, Circle’s USDC, and Binance’s BUSD.
During his Senate Banking Committee hearing on Tuesday, January 10, Fed Chairman Jerome Powell said that the central bank is planning to publish a report on digital currencies in the coming weeks. However, Powell didn’t comment on who they are planning to release the U.S. CNDC aka the Digital Dollar.
Previously, the Federal Reserve and other U.S. regulatory bodies have stressed that other stablecoins need more regulation and should only be issued by the banks.
If the Fed proceeds to issue its own CBDC anytime sooner or later, it still remains unclear if other private cryptocurrencies can work alongside. The President Working Group on Financial Markets recently released a report the Congress should give financial agencies additional authority that would subject coin issuers to bank-like rules.
Later today, the U.S. is set to release its inflation data which could have a direct impact on the Fed quantitative tightening (QT) measures. This could, in turn, have a direct impact on the crypto market.
On Wednesday, January 11, the broader crypto market registered a healthy bounce back with the overall market cap going back once again above $2.0 trillion.