Jerome Powell, Chair of the US Federal Reserve, stated that he sees cryptocurrencies like Bitcoin (BTC) as assets with “staying power” in the US economy. The comments from Powell came as he answered some queries about stablecoins and cryptocurrency during his June 21 testimony before the House Financial Services Committee. Following his statement, prices of major cryptocurrencies, including BTC and ETH, rose.
Powell talked positively about crypto assets despite acknowledging a sharp decline in the industry in 2022. He stressed the need for legislation to govern the digital asset industry, especially cryptocurrencies. He also said that Federal Reserve members are participating in talks about creating regulations for the US digital asset market.
As for stablecoins, the chairman emphasized that the Fed sees them as a form of money. The US central bank should play a strong role in overseeing stablecoins, a significant component of the overall cryptocurrency market, he said. Moreover, lawmakers are currently working on legislation for stablecoins.
“We do see payment stablecoins as a form of money. The ultimate source of credibility in money is central bank. We believe it would be appropriate to have a robust federal role.”
A stablecoin is a cryptocurrency launched to keep its value consistent and stable compared to other assets, like gold or the US dollar. This makes stablecoins more attractive to investors looking for investments with lower price volatility than traditional cryptocurrencies like BTC.
US And Central Bank Digital Currencies (CBDCs)
During a conversation with a House panel led by Chairman Patrick McHenry, Powell mentioned that the US could have its own central bank digital currency. Meanwhile, he emphasized that the Federal Reserve will not manage or support any retail services associated with a digital dollar.
However, the issuance and control of US CBDCs would be managed through the entire US banking system.
Specifically, their statement reveals the acquisition of crypto assets, even though the US SEC recently filed a lawsuit against Coinbase and Binance for allegedly operating illegally in the US. However, highlighting the SEC’s actions, Powell expressed optimism that the committee would help bring transparency to the space and set guidelines for the SEC to follow.
In 2021, Powell informed Congress that stablecoins could be a valuable addition to the “payments universe” compared to other types of cryptocurrency assets. He advocated governing stablecoins similarly to bank deposits and money market mutual funds.