Jerome Powell, Fed Chair, Says ‘War Underscores Need’ For Cryptocurrency Regulation.

Powell is giving testimony on the situation of the economy before the House Financial Services Committee.

Russia’s invasion of Ukraine, according to Fed Chair Pro Tempore Jerome Powell, may emphasise the need for cryptocurrency regulation to prevent sanctioned individuals from adopting cryptocurrencies to bypass sanctions.

Powell said:

“[The Ukraine-Russia conflict] underscored the need for Congressional action on digital finance including cryptocurrencies. We have this burgeoning industry which has many parts to it, and there isn’t in place the kind of regulatory framework that needs to be there.”

The Fed Chair was replying to a question about whether Russia may circumvent sanctions by using cryptocurrency. The United States, the European Union, and other countries have put financial sanctions on Russia in an attempt to sway it to withdraw from its invasion of Ukraine. Earlier in the day, the European Union disconnected seven of Russia’s top banks from the SWIFT interbank messaging system.

Powell cited the risk that terrorists or other harmful actors may utilize cryptocurrencies as another justification of the need for additional regulation.

Powell is scheduled to appear before the House Financial Services Committee on Wednesday about the status of the economy and monetary policy. On Thursday, he will provide a report to the Senate Banking Committee.

Congressman Juan Vargas inquired about the Federal Reserve’s recent reports on central bank digital currencies. Powell referred to the documents, stating that the Fed is looking for public comments.

“This will be something that we will invest a fair amount of time and expertise … to get it right. We have not decided to do it.”

The question of whether the advantages exceed the costs of a central bank digital currency (CBDC) remains unresolved, Powell added.

He also stated that the US Federal Reserve will strive to reduce inflation by boosting interest rates later this year. He stated that the central bank was planning to hike its policy rate, but that the events in Ukraine may have altered expectations.

Nonetheless, he told Congress that he expects inflation to peak and “come down” before the end of the year. Powell stated that he is willing to impose and support a 25 basis point rate increase in March.

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Patrick

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