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Fed Chair Says Congress Needs to Act on Crypto Regulation During Senate Testimony

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Federal Reserve Chair Powell reiterated the need for Congress to create a cryptographic regulatory framework.

Key Point

  • Federal Reserve Chair Jerome Powell made a semi-annual pilgrimage to Capitol Hill to provide lawmakers with his views on central bank monetary policy.
  • His remarks focused on rising inflation and double-digit increases in gas, food and housing costs in 2022, but he answered questions about crypto and stablecoin and Congress needs to set regulatory standards. I emphasized that there is.
  • Last week, the Fed announced plans to raise interest rates by 0.75% immediately and another 0.50% or 0.75% in July.

On Wednesday afternoon, Federal Reserve Chairman Jerome Powell testified to the Senate Banking Commission on the monetary policy of his institution. He will provide additional testimony to the House Financial Services Commission on Thursday. In his comment today, Powell covered several topics, including the 2022 rise in housing, gas and food costs and the surge in inflation. The Federal Reserve also had some things to say about cryptocurrencies and stablecoin.

What Powell said about Stablecoin and Crypto today

In his testimony, Powell compared stablecoins, which have value backed by reserves such as the US dollar and gold, to money market funds as a way to explain to legislators.

“The mechanism of money market funds is that they have great transparency about what is included in the reserve and what is required for the reserve to maintain the value of $ 1. The world of stablecoin is emerging, but it isn’t. ”We have a regulatory scheme that fits our needs … Many members of Congress now generally regulate stablecoin and digital assets. We’re proposing a new framework for doing this, which seems wise, “Powell said.

He also said that regulatory ambiguity is one of the biggest challenges facing the crypto sector today. “Who really has the authority over this? That’s what Congress needs to clarify. We [the Federal Reserve] Some banks have authority over what they can and cannot do. The SEC has jurisdiction over securities and the CFTC [Commodity Futures Trading Commission] Have relevant jurisdiction [over commodities.] Part of this will sort out what these things are and how they should be regulated, “he said.

Congress is progressing

But he noticed that Congress was making progress. “Parliament is investing bandwidth and considering proposals. This is a healthy process that leads to bipartisan support and the introduction of appropriate regulations throughout. [crypto] range. This is the same as any other major innovation area. Eventually, Congress will come together to create a more purposeful regulatory framework. [crypto] As in many other cases, “he added.

At the time of this writing, Bitcoin, the largest cryptocurrency by market capitalization, was down 5% per coin transaction to $ 19,928, according to CoinMarketCap. The day after Powell’s remarks, the crypto exchange and the broader crypto market as a whole fell 3.83%.

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