Payment stablecoins are gaining recognition as a form of money, according to Jerome Powell, Chair of the U.S. Federal Reserve. Powell made this statement during his testimony before the House Financial Services Committee, where he discussed various aspects of digital assets.
Powell emphasized the need for the central bank to play a role in regulating stablecoins. He stated, “We do see payment stablecoins as a form of money. The ultimate source of credibility in money is the central bank. We believe it would be appropriate to have a robust federal role.”
This stance is notable because it indicates a level of acceptance for cryptocurrencies, despite recent regulatory action against major platforms like Binance and Coinbase. The Securities and Exchange Commission (SEC) filed a lawsuit against both companies, raising concerns about their compliance with existing regulations.
In addition to stablecoins, Powell touched on the possibility of a central bank digital currency (CBDC). He mentioned that discussions with lawmakers on crypto legislation have taken place but noted that a CBDC is not likely to be implemented soon. This statement aligns with the Federal Open Market Committee’s recent decision to skip a rate hike, suggesting a cautious approach to monetary policy.
Meanwhile, the price of Bitcoin experienced a significant surge, surpassing the $30,000 mark. Glassnode, an on-chain data provider, suggests that technical indicators point to a potential further increase to $34,000.
Overall, Powell’s acknowledgment of payment stablecoins as a form of money underscores the growing importance of cryptocurrencies in the financial landscape. It also highlights the need for regulatory frameworks to ensure the stability and integrity of these digital assets.