US Federal Reserve (FRS) Chairman Jerome Powell has changed his attitude towards stablecoins and confirmed that the economy no longer needs a “soft” Fed policy.
Jerome Powell said at a hearing on the reappointment of the Fed chairman in the US Congress that the state digital currency will not oust stablecoins from the market.
During the hearing, Senator Pat Toomey asked if the release of the US government digital currency would interfere with the use of “properly regulated, privately issued stablecoins.” Powell responded that stablecoins can be used in conjunction with government digital currencies.
The opinion of the head of the FRS has changed a lot – in July last year he announced that the main advantage of the digital currency of the Central Bank would be the replacement of cryptocurrencies, including stablecoins. However, Powell argued that unlike China, the Fed has no intention of banning cryptocurrencies entirely.
During hearings in the US Congress last month, industry leaders and congressmen expressed opposing views on the issue. Some experts proposed to tighten regulation of stablecoins, while others supported the introduction of a law that would favor the development of the market.
Financial Services Committee Chair Maxine Waters suggested that stable cryptocurrencies could pose a threat to the US dollar. Some believe that stablecoins can be classified as securities.
The most widely discussed topic at the hearing was inflation. Powell stressed that with inflation well above the target, the economy “no longer needs the Fed’s soft policies.” The statement of the regulator suggests that the Fed’s policy will be aimed at withdrawing liquidity from the US financial system, which may negatively affect the cryptocurrency market.
Recall that at the end of last year, the chairman of the US Federal Reserve called for the development of legislation to regulate stablecoins. Last month, two US congressmen opposed stringent requirements for stablecoin issuers.
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