Powell talks crypto to Congress, suggests regulating stablecoins more

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Jerome Powell

Tech media are reporting on Fed chief Jerome Powell’s comments in front of a House Financial Services meeting Thursday where he appeared with Janet Yellen talking about the future of crypto in general and stablecoins in particular.

 

Powell has been publicly supportive of the idea of creating a U.S. CBDC or digital dollar which would be managed by the central bank.

 

That led Ted Budd (R-NC) of the Congressional Blockchain Caucus to ask Powell directly whether he would support banning cryptocurrency as a whole.

 

“I have no intention (of doing that),” Powell reportedly replied.

 

He did, however, say that stablecoins need more regulation.

 

“(Stablecoins are) to some extent outside the regulatory perimeter, and it’s appropriate that they be regulated,” Powell reportedly remarked, comparing stablecoins to money market accounts or bank deposits. “Same activity, same regulation.”

 

The idea that Powell would want to ban all cryptocurrency rests on at least two misunderstandings of the global climate. First, stablecoins are not all cryptocurrencies. The stablecoin is a specific type of coin or token pegged to a fiat currency. Secondly, coverage of the isse by Cheyenne Ligon at Coindesk today shows some are nervous because China has acted to ban cryptocurrencies entirely. But the US is not China, and such a move here would assumedly lead to some volume of litigation.

 

In other related news, congressional members also asked Janet Yellen about cryptocurrency regulation.

 

Yellen said the IRS is working on doing that regulation and talked about broadened enumerated IRS powers:

“The issue of financial privacy was … a theme at Thursday’s hearing, with three representatives – Reps. David Kustoff (R-Tenn.), Trey Hollingsworth (R-Ind.) and William Timmons (R-S.C.) – bringing up concerns about a push by the IRS to enact new regulations requiring banks to report annual inflows and outflows from all accounts with over $600,” Ligon writes. “Yellen confirmed the IRS’ plans, saying they were necessary to address an estimated $7 trillion tax gap.”

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