The president of the federal reserve, Jerome Powell, reiterated the need for a regulatory framework for Stablecoins and indicated that the Fed did not intend to limit the interaction of the banking sectors with the cryptographic industry.
Speaking at the Chicago Economic Club on April 16, Powell said that the two Congress Chambers are revisiting efforts to legislate a stablecoin frame, which he described as necessary given the growing relevance of these digital instruments.
Powell noted that previous efforts to collaborate with the Congress on a legal structure for Stablecoins failed. However, he observed that “the climate evolves”, the legislators now showing a renewal of interest in the formalization of regulations.
He pointed out that such a framework should include consumer protection and guarantee transparency and added that “stablescoins are a digital product that could really have a fairly wide appeal”.
Release rules
Powell also discussed the position of the federal reserve on banking activity linked to the crypto. He recognized that regulators of the American bank, including the Fed, had adopted a conservative approach to issue advice on how banks should manage exposure to digital assets.
However, he said that some of these guidelines may be relaxed to adapt to responsible innovation, provided that consumer protections and financial security remain intact.
He said:
“We will try to do so in a way that preserves security and solidity.”
The remarks are based on the previous statements of Powell that the Fed does not seek to prevent banks from serving legal cryptographic customers.
As a testimony to Congress earlier this year, Powell said that cryptographic activities already occur in banks regulated by the Fed Under established supervision frames.
He quoted custody of cryptography as an example of such services that banks can carry out safely if they and regulators include the scope of activities.
Powell has also recognized the regulatory complexity surrounding the integration of digital assets into traditional finance, calling for a more complete monitoring structure.
Crypto and bank
During a press conference following the meeting of the Federal Open Market Committee (FOMC) in February, Powell said that if the bar remained high so that the banks engage with the crypto, the Fed does not intend to cut access to the bank for legally digital asset companies.
The current discussion concerning the legislation on stablescoin occurs in the middle of continuous growth in their use of payments and digital regulations. Last year, Stablecoins recorded nearly 14 billions of dollars in transfer volume, exceeding the visa.
Powell’s declaration positions the federal reserve as favorable to the efforts of the congress to create formal rules for stablecoins, provided that such legislation is balanced innovation with risk confinement.
There is no federal regulatory regime specifically governing stablecoins, although multiple legislative proposals circulated during the recent sessions of the Congress. The most notable are the law of engineering and the stable act, proposed by the House of Representatives and the Congress, respectively.
The latest position of the Fed indicates growing preparation among American financial authorities to engage in the policy of digital assets, in particular as staboins are increasingly integrated into the global financial markets.
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