- Testifying before the Senate Banking Committee on Tuesday, US Federal Reserve Chair, Jerome Powell, endorsed the creation of a regulatory framework for stablecoins that could support their growth while protecting consumers and businesses.
- Powell also said he would oppose the creation of a CBDC in the US, echoing President Donald Trump’s election promise to block any attempt to launch a CBDC.
- Powell said the Fed was looking into claims of widespread debanking of crypto firms under the Biden administration, but he stopped short of saying the practice was politically motivated.
The US crypto industry has supporters in some very important positions — Acting SEC Chair Mark T. Uyeda, Treasury Secretary Scott Bessent, incoming Head of the Commerce Department Howard Lutnick and of course President Donald Trump. All these guys are crypto guys, yuge crypto guys. Trust me, these guys know a tremendous amount about crypto.
Now it looks like crypto might also have a man at the Fed.
The chair of the US Federal Reserve, Jerome Powell, testified before the Senate Banking Committee on Tuesday stating he endorses the development of a regulatory framework to support the growth of stablecoins while also protecting consumers and businesses.
Stablecoins may have a big future with consumers and businesses. We can’t know that now, but it is important for the development of stablecoins — in a safe and sound manner that protects consumers and savers and all — that there be a regulatory framework.
Jerome Powell, Chair of the US Federal ReserveChair Powell expressed concern about the recent wave of reports of crypto firms being debanked under the Biden administration. He didn’t, however, lend support to the idea that it was a politically motivated, orchestrated attack on digital assets — the so-called ‘Operation Chokepoint 2.0’. Instead Powell suggested it may be due to banks’ inherent risk aversion and strict adherence to anti-money laundering laws.
Powell also committed to opposing any attempt to launch a central bank digital currency (CBDC) in the US, an issue many both inside and outside the crypto community are concerned about due to its potential privacy implications.
Related: US Govt Didn’t Order Crypto Debanking: Democratic Rep Testifies, Calls Out Trump’s Bias
Powell Says Fed Supports Regulation For Stablecoins, Opposes CBDC
Digital assets didn’t make up much of Powell’s testimony at the hearing, but the comments he did make were largely positive.
On stablecoins Powell said that they have the potential to play an important role in the US economy for both consumers and businesses, but added that for that to happen regulation needs to be strengthened to ensure consumers are adequately protected.
Asked whether he’d oppose any attempt to launch a CBDC in the US, Powell simply responded “yes”. CBDCs are generally viewed as bad things by crypto enthusiasts due to the privacy implications of everyone’s complete transaction histories being immutably recorded on a public ledger.
For several years the libertarian think tank, the Cato Institute, has campaigned to block CBDCs claiming that they “could spell doom for what little financial privacy protections remain”, adding that “with so much data in hand, a CBDC would provide countless opportunities for the government to control citizens’ financial activity.”
During his campaign, Donald Trump also vowed to block any attempt to launch a CBDC in the US.
Powell: Fed Examining Crypto Debanking Claims
On the crypto debanking issue, Powell said he’s worried about the trend and is in the process of changing internal supervision policies at the Fed.
The Fed Chair said he was “troubled by the quantity of these reports”, but suggested they may simply be due to banks seeking to minimise their risk exposure and not the result of a secretive plot to thwart the crypto industry’s growth:
One theory is that banks are just very risk averse.
Jerome Powell, Chair of the US Federal ReserveHowever, Powell also said that he wanted to examine the issue more closely and figure out exactly what went on, explaining “we’re determined to take a fresh look at that”, adding that he’s “struck by the growing number of cases of what appears to be debanking”.
Related: Coinbase and Marathon to Testify at Congressional Probe into ‘Operation Chokepoint 2.0’
Powell also specifically thanked pro-crypto Senator Cynthia Lummis for highlighting during a recent hearing that the Fed currently has a policy of more closely scrutinising bankers who have engaged in vaguely defined “controversial speech or activity”. Powell said this policy is in the process of being removed from the Fed’s internal manuals.
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