March 27, 2024
Latest Cryptocurrency News

US Federal Reserve Sees Stablecoins as Currency, Affirms Chair Jerome Powell

During the House of Representatives Financial Services Committee’s semi-annual hearing on Fed policy on June 21, Chair Jerome Powell stated that the United States Federal Reserve Board considers payment stablecoins to be a form of money. Powell made this remark in response to a question from committee ranking member Maxine Waters regarding the proposed stablecoin bill, which was introduced by Republicans and, if approved, would be the initial cryptocurrency legislation in the United States.

Waters expressed her concerns about the bill, noting that it would establish “58 different licenses with federal regulatory approval over only two of the licenses.” The remaining licenses would be issued by states, territories, and other jurisdictions, which Waters deemed as an unprecedented level of state preemption. In response, Powell emphasized, “We do see payment stablecoins as a form of money,” and he expressed the belief that a strong federal role in the regulation of stablecoins would be appropriate. He cautioned against allowing extensive private money creation at the state level, stating that it would be a mistake.

Powell’s stance on the draft bill diverges from that of Securities and Exchange Commission (SEC) Chair Gary Gensler, who previously stated that stablecoins might require registration and regulation, asserting that all cryptocurrencies, except Bitcoin, are considered securities. Furthermore, Powell’s position does not align with Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam’s assertion that stablecoins should be classified as commodities. While there is no readily available definition of money from the Federal Reserve, it is commonly understood as a medium of exchange. On the other hand, commodities are defined under U.S. law as “goods and articles […] and all services, rights, and interests […] in which contracts for future delivery are presently or in the future dealt in.” The definition of security is considerably more complex.

In a separate development on June 21, former CFTC Chair Chris Giancarlo provided his perspective on the bill in an editorial published in The Hill. Giancarlo highlighted the discretionary power of licensing authorities to compel stablecoin protocols to refuse services to lawful businesses that might be politically disfavored. He considered this aspect a significant omission that could enable a government policy akin to the Obama administration’s Operation Choke Point. Giancarlo proposed a solution, stating, “The simple fix to this problem is to provide that government licensing authorities have no discretion to pick and choose among otherwise lawful activities and condition licensure on the stablecoin’s denial of legal transactions.” Without this alteration, Giancarlo warned that stablecoin transactions would be excessively influenced by the shifting political climate in Washington.

Related posts

Ethereum’s Update: ‘Blobs’ to Debut via Dencun Upgrade on March 13

Henry Clarke

LayerZero Announces Native Token Launch

Kevin Wilson

Kraken to Share Data of 42K Users with IRS

Anna Garcia

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More