Fed Chair Powell Says Crypto Needs New Regulation Citing Risks to US Financial System – Cryptocurrency, according to Federal Reserve Chairman Jerome Powell, requires new regulation because it poses threats to the US financial system and could disrupt existing financial institutions.
During a panel discussion on digital currencies hosted by the Bank for International Settlements on Wednesday, Federal Reserve Chairman Jerome Powell discussed the need for additional regulation for bitcoin.
The Fed chairman noted that new forms of digital money, such as cryptocurrencies and stablecoins, may necessitate new policies to protect consumers, saying:
“Our current regulatory frameworks were not designed with the digital age in mind. Changes to existing laws and regulations, as well as wholly new norms and frameworks, will be required for central bank digital currencies, stablecoins, and digital finance in general.”
Powell reaffirmed his belief that crypto should adhere to the “same activity, same regulation” rule. He proposed regulating stablecoin issuers like banks in October of last year. “Stablecoins work in a similar way to money market funds.” They’re similar to bank deposits and it’s only right that they’re regulated, because they’re doing the same thing,” he said.
“It’s quite likely that digital financial operations that are currently outside the regulatory perimeter” will be regulated, he continued, “which is required to level the playing field, maintain user trust, and safeguard consumers.”
New technology, according to the chairman of the Federal Reserve, will undoubtedly make electronic payments cheaper and faster. He did, however, point out that they pose a threat to the US financial system and may disrupt current financial institutions.
Fed Chair Powell Says Crypto Needs New Regulation Citing Risks to US Financial System – Crypto assets have also been used to “enable illegal behavior,” such as money laundering, according to Powell. He added:
“This must be avoided so that the inventions that do survive and gain widespread adoption are those that give long-term value.”
Americans who purchase cryptocurrencies and stablecoins “may not fully realize the extent of their possible losses, or that these investments generally lack the government protections that come with many of the traditional financial instruments and services that they’re used to,” the Fed chair warned.