Fed Chair Says Congress Needs to Act on Crypto Regulation During Senate Testimony

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Fed Chairman Powell has repeatedly stressed the need for Congress to create a cryptographic regulatory framework.

Key points

  • Federal Reserve Chairman Jerome Powell made his six-month pilgrimage to the Capitol to offer lawmakers his perspective on the central bank’s monetary policy.
  • While the focus of his comments was on rising inflation as well as double-digit increases in gas, food and housing costs in 2022, he answered questions about stable cryptocurrencies and currencies, stressing the need for Congress to set regulatory standards. .
  • Last week, the Fed announced plans to raise interest rates by 0.75% immediately and possibly another 0.50% or 0.75% in July.

On Wednesday afternoon, Federal Reserve Chairman Jerome Powell testified before the Senate Banking Committee on his agency’s monetary policies. He will testify on Thursday before a House Financial Services committee. During his remarks today, Powell covered several topics, including rising housing, gas and food costs in 2022, as well as rising inflation, which recently reached a 40-year high of 8.6% compared to same period last year. The Fed chair also had several things to say about cryptocurrencies and stable currencies.

What Powell said today about stablecoins and crypts

During his testimony, Powell compared a stable currency, which by definition has its value backed by a reserve asset such as the US dollar or gold, with a money market fund as a way to explain it to lawmakers.

“The way money market funds work is that there is a lot of transparency about what is in the reserve and its requirements about what is required to be in the reserve to preserve that one dollar value. The world of stable currencies is new and emerging, and it doesn’t. ” I don’t have the right regulatory framework for the purpose you need … many members of Congress have proposed new frameworks to regulate stable currencies and digital assets in general, and that seems like a wise thing to do, ”Powell said.

He also noted that regulatory ambiguity is one of the biggest challenges facing the cryptocurrency industry now. “Who really has authority over this? That’s something Congress should clarify. We [the Federal Reserve] have authority over what some banks can and cannot do. The SEC has jurisdiction over securities and CFTC [Commodity Futures Trading Commission] has the relevant competence [over commodities.] Part of that will be to figure out what these things are and how they should be regulated, “he said.

Congress is moving forward

However, he noted that Congress is making progress. “Congress is investing in bandwidth and analyzing proposals, that is a healthy process that should eventually lead to something that has bipartisan support and establishes proper regulation for the whole set. [crypto] area. It’s like any other area of ​​great innovation. Ultimately, Congress will meet to create a regulatory framework that is more appropriate for its purpose [crypto] as in so many other cases, “he added.

At the time of writing, the largest market capitalization cryptocurrency – Bitcoin – was down 5% per traded currency to $ 19,928, according to CoinMarketCap. While cryptocurrency exchanges and the broader cryptocurrency market fell 3.83% the day after Powell’s comments.

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