Jerome Powell Urges Congress to Create Stablecoin Regulations

Federal Reserve Chairman Jerome Powell has called on Congress to develop a legislative framework for stablecoins. Addressing House Democrats in a closed-door meeting with the House Financial Services Committee, Powell highlighted the urgent need for stablecoins regulations, signaling the Federal Reserve’s proactive stance.

Jerome Powell Push for Stablecoin Legislation

Jerome Powell’s discussions with lawmakers underscore a pivotal moment for the future of digital currencies in the United States. “We need a framework for stablecoins [and I’m] very supportive and am glad that we are close,” Powell stated, reflecting a growing consensus on the necessity of regulatory measures for stablecoins. This dialogue is part of a broader effort by the Federal Reserve to ensure that the development of stablecoin and Central Bank Digital Currencies (CBDC) regulations is grounded in robust oversight.

The Federal Reserve Chairman also touched upon CBDCs, emphasizing that any move towards their adoption would require explicit authorization from Congress. “If we’re going to have a CBDC, Congress needs to authorize it,” Powell mentioned, reiterating the importance of legislative backing for such significant financial innovations. This stance was previously echoed in a hearing on monetary policy in June 2023, where Powell underscored the need for central bank credibility in monetary systems.

Legislative Developments and Future Directions

The urgency for stablecoin regulation has been met with legislative action, as evidenced by the approval of two critical bills by the House Financial Services Committee in July 2023. The Financial Innovation and Technology for the 21st Century Act and the Blockchain Regulatory Certainty Act represent significant strides towards creating a more structured regulatory environment for crypto firms and blockchain entities.

The Financial Innovation and Technology for the 21st Century Act lays down a comprehensive framework for crypto firms to register with either the Commodity Futures Trading Commission (CFTC) or the Securities and Exchange Commission (SEC). It also introduces a process for certifying decentralized projects to foster innovation while ensuring consumer protection. On the other hand, the Blockchain Regulatory Certainty Act seeks to streamline regulations for blockchain entities, specifically defining which entities qualify as money transmitters. This bipartisan effort aims to clarify the regulatory landscape for blockchain technology, reducing ambiguity and fostering growth within the sector.

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