[NEWS] US Fed Chairman Powell calls stablecoins "a type of currency"

At a twice-yearly hearing on monetary policy by the House Financial Services Committee on the 21st, Federal Reserve Chairman Jerome Powell expressed his view that stablecoins should be managed by the central bank.

This was stated when referring to cryptocurrencies, and Chairman Powell said, "We consider settlement stablecoins to be a form of money. In all developed countries, the ultimate source of confidence in money is the central bank."

He continued, "It is appropriate for the federal government to play a very strong role," emphasizing the need for central banks to manage the issuance of stablecoins. He also stated his view that "it is wrong for private currency to be issued at the state level."

Chairman Powell also mentioned that Federal Reserve officials are participating in discussions with lawmakers of both parties regarding the cryptocurrency bill that the committee is working on. At the beginning of the hearing, Republican House Financial Services Chairman Patrick McHenry said he plans to mark up two cryptocurrency bills in late July.

Markup is a process whereby the bill is discussed and revised before being voted on in committee. The final bill is compiled based on the discussions here, and after a vote, the bill is sent to the plenary session.

Chairman Powell also mentioned the current cryptocurrency market, stating that he believes it has some staying power in terms of its influence on the U.S. economy. On the other hand, he noted that the cryptocurrency market has been declining since last year.

At the hearing, he also mentioned CBDC (Central Bank Digital Currency). Chairman Powell said that he is "far from that level" when asked whether a digital dollar equivalent to a CBDC should be issued, and indicated that he is not yet at the stage of deciding whether or not to issue one.

He further stated that he "does not support being issued to individuals," and indicated that even if a digital dollar is issued, it would be preferable for it to be issued in a wholesale format that would facilitate settlement between companies and institutional investors.

In relation to this, Chairman Powell reiterated that it is important to maintain the current role of the U.S. dollar in traditional finance.

For the cryptocurrency industry, Chairman Powell's decision to consider stablecoins as a type of currency at this hearing may have an impact on the future regulatory landscape.

Currently, the conflict between the US Securities and Exchange Commission (SEC) and the cryptocurrency industry is deepening, with some cryptocurrencies being considered securities. SEC Chairman Gary Gensler has indicated that many cryptocurrencies, except for Bitcoin (BTC), qualify as securities, which is thought to include some stablecoins.

Given this current situation, Chairman Powell's remarks this time show a difference in attitude between him and Chairman Gensler.

Image: Shutterstock