Jerome Powell, the chairman of the Federal Reserve, made a distinction between regulating stablecoins and outlawing Bitcoin and other cryptocurrencies.
Chairman of the Federal Reserve, Jerome Powell, told Congress today that he has “no intention” of banning cryptocurrencies like China has.
Powell’s statement came after Reporter Ted Budd questioned him on the Treasury Department’s and Federal Reserve’s responses to the COVID outbreak during a hearing of the House Committee on Financial Services.
“Is it your intention to ban or limit the use of cryptocurrencies, like we’re seeing in China?” Budd questioned the central bank’s chief regulator.
“No intention to ban them,” Jerome Powell said.
“But stablecoins are like money market funds, they’re like bank deposits, but they’re to some extent outside of the regulatory perimeter. And it’s appropriate that they be regulated. Same activity, same regulation.” Jerome Powell continued.
Stablecoins, such as Tether and USDC, are digital assets designed to hold a 1:1 value with a fiat currency. Powell has previously expressed concerns about Tether’s activities, noting that USDT is not entirely backed by US dollars in a bank, but rather by a mix of real dollars and other assets, including debt in the form of commercial paper.
“Most of the time they’re quite liquid, it’s all good,” Powell said during a July hearing. However, during a crisis, “The market simply vanishes. That’s when they’ll demand their money.”
Regulations, he feels, will make sure consumers can get their money out in the case of a crisis.