Fed chief Jerome Powell says he is not concerned about cryptocurrencies breaking global stability

Fed chief Jerome Powell says he is not concerned about cryptocurrencies breaking global stability. “Stablecoins can certainly be a productive, consumer-friendly part of the financial system when properly regulated,” said Jerome Powell.

Messages

Federal Reserve Chairman Jerome Powell suggested that while the government agency should consider monitoring developments in the crypto space, it does not see cryptocurrencies as a stability issue.

In response to a crypto question from Michael Derby of the Wall Avenue Journal on Tuesday, Powell endorsed the conclusion of a report by the President’s Working Group on Financial Markets released in November. The report suggested that stablecoin issuers are subject to “adequate federal oversight” similar to those of banks, “much-needed” anti-risk laws.

“Stablecoins can certainly be a useful part that serves consumers efficiently when properly managed,” Powell said. “At the moment they don’t. They have the potential to scale, especially when connected to one of the very large technology networks in existence. ”

“You can have a systemically important instant payment network, but without proper regulation and security. The public relies on the government, and especially the Fed, to make sure the payment system is safe and reliable. “

Powell appears to support the Biden administration’s recent stance on digital assets ahead of its Senate confirmation hearing to become the next Fed chairman. Powell has served on the Fed’s Board of Governors since 2012 and Chairman since 2018.

Related: Chairman Jerome Powell says the Fed is undecided about the digital dollar

Although the Fed President said that cryptocurrencies may not be a financial stability issue for the US at the moment, he still describes digital currencies used as speculative assets as “at risk” and “nothing backed”. Powell previously raised his concerns about cryptocurrencies – adding that he would not support the ban on assets in the Chinese way – while also expressing the need for regulations on stablecoins.

“Stablecoins are like money market funds, they are like bank deposits, but to some extent they are outside of regulation and it is appropriate that they be regulated,” Powell said in September.