According to The Block, Jerome Powell, the chairman of the Federal Reserve asserts that payment stablecoins are money, and the US central bank should be involved in sanctioning their issue.
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Federal Reserve Sees Stablecoin as Money
The Federal Reserve Chair said: “We do see payment stablecoins as money.” In his testimony in the House Financial Services Committee on Wednesday, he stated:
“We believe that it would be appropriate to have a quite robust federal role in what happens in stablecoins going forward, and leaving us with a weak role and allowing a lot of private money creation at the state level would be a mistake.”
US Interest Rates are Expected to Increase
The Federal Reserve Chief gives signals during his speech to the US Congress that interest rates are expected to increase, however gradually, to manage price pressure amid inflation worries.
The Fed chair acknowledged that the central bank is “a long way” from making a decision about whether to issue a CBDC, but said that if it will be issued, it would be done so in a way that maintained financial privacy and wouldn’t replace the current financial system.
Federal Reserve Chief Highlights the Main Points
It should be noted that the main objective is to create a strong and thorough regulatory framework for stablecoins like the USDC, Tether (USDT), and others that are tied to the US dollar.
Members of the US House Financial Services Committee first put out a drafted bill to control stablecoins in the area back in April. It is noteworthy that while Republicans may pass the plan on a party-line vote out of committee and the House of Representatives, it need Democratic backing to become law.
State Regulators to Authorize Stablecoin Issuance
Rep. Maxine Waters, a leading Democrat on the House Financial Services Committee, expressed opposition to the Republican colleagues’ plan to enable state regulators to authorize stablecoin issuance.
Waters explained how a stablecoin that was certified in an area could subsequently be marketed nationwide, regardless of whether any additional state’s regulators gave their approval. She said: “This proposal takes state preemption to a whole new level.”
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