The head of the US Federal Reserve System (FRS), Jerome Powell, has called for the involvement of the FRS in the regulation of “stablecoins”. In a speech before the Committee on Financial Services of the House of Representatives, Powell stated that payment stablecoins should be considered as money and that it is appropriate for the FRS to have a strong federal role in regulating stablecoins in the future.
Powell believes that it would be a mistake to leave the FRS with weak powers in the stablecoin segment, as it could lead to the creation of a large amount of private money at the state level. He is confident that the FRS should play a part in approving the issuance of stablecoins in the United States.
During the same hearing, House Financial Services Committee Chairman Patrick McHenry informed about plans to vote on bills regulating cryptocurrencies and stablecoins in the second week of July. However, Powell expressed skepticism about this idea and the document as a whole.
The first version of the stablecoin regulation bill was presented in April, with a focus on the activities of issuers and control over them. Later, an updated version of the document was proposed, which removes the jurisdiction of the US Securities and Exchange Commission over stablecoins.
During congressional hearings, politicians criticized the bill for outdated data and called for the information to be updated for the next meeting. In June, the third version of the document was presented, which proposes the FRS as the oversight body for the stablecoin industry. This would require the regulator to establish future requirements for the release of stablecoin assets.
The involvement of the FRS in the regulation of stablecoins reflects the growing concern among regulators about the potential risks and challenges posed by these digital assets. As stablecoins gain popularity and become more widely used, it is crucial for regulators to establish clear guidelines and oversight to ensure the stability and integrity of the financial system.
What are Jerome Powell’s arguments for the Federal Reserve System (FRS) taking an active role in regulating stablecoins?
The head of the US Federal Reserve System (FRS), Jerome Powell, has emphasized the need for the FRS to take an active role in regulating stablecoins. In a recent speech to the Committee on Financial Services of the House of Representatives, Powell argued that payment stablecoins should be recognized as a form of money and that it is appropriate for the FRS to have a strong federal presence in overseeing their regulation.
Powell expressed concerns about the consequences of leaving the FRS with limited powers in the stablecoin sector, warning that it could result in the proliferation of private money on a state level. He firmly believes that the FRS should have a say in approving the issuance of stablecoins in the United States.
Meanwhile, House Financial Services Committee Chairman Patrick McHenry announced plans to vote on bills regulating cryptocurrencies and stablecoins in the second week of July. However, Powell expressed doubt about this timeline and voiced skepticism regarding the proposed legislation as a whole.
The initial version of the stablecoin regulation bill, submitted in April, primarily focused on the activities of stablecoin issuers and their oversight. A subsequent revised version eliminated the jurisdiction of the US Securities and Exchange Commission over stablecoins.
During congressional hearings, lawmakers criticized the bill for outdated information and requested that it be updated for future discussions. In June, a third version of the bill was introduced, proposing the FRS as the regulatory body responsible for overseeing the stablecoin industry. This proposal would require the regulator to establish requirements for the issuance of stablecoin assets in the future.
The FRS’s involvement in the regulation of stablecoins reflects growing concerns among regulators about the potential risks and challenges associated with these digital assets. As stablecoins gain popularity and wider usage, it becomes crucial for regulators to establish clear guidelines and oversight mechanisms to safeguard the stability and integrity of the financial system.
