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The chairman of the Federal Reserve, Jerome Powell, states crypto needs brand-new guideline, mentioning that it provides dangers to the U.S. monetary system and might destabilize existing banks.
Fed Chair Powell Sees the Need for New Crypto Regulation
Federal Reserve Chairman Jerome Powell discussed the requirement to develop brand-new guideline for cryptocurrency Wednesday throughout a panel conversation on digital currencies arranged by the Bank for International Settlements (BIS).
Noting that brand-new kinds of digital cash, consisting of cryptocurrencies and stablecoins, will need brand-new guidelines to secure customers, the Fed chairman stated:
Our existing regulative structures were not constructed with a digital world in mind … Stablecoins, reserve bank digital currencies, and digital financing more usually, will need modifications to existing laws and guideline and even completely brand-new guidelines and structures.
Powell restated his position that crypto should follow the “same activity, same regulation” concept. In October in 2015, he recommended managing stablecoin providers like banks. “Stablecoins are like money market funds. They’re like bank deposits … and it’s appropriate that they be regulated, same activity, same regulation,” he believed
He included that “It’s highly likely that digital financial activities that are currently outside the regulatory perimeter” will be managed, “which is necessary to level the playing field, keep the trust of users, protect consumers and all that.”
The Federal Reserve chairman acknowledged that brand-new innovations will likely make electronic payments less expensive and much faster. However, he explained that they provide dangers to the U.S. monetary system and might destabilize existing banks.
Powell even more worried that crypto properties “have been used to facilitate illicit activity,” such as cash laundering. He kept in mind:
We require to avoid this so that the developments that do do and endure draw in broad adoption are those that offer worth with time.
The Fed chair likewise alerted that Americans who purchase stablecoins and cryptocurrencies “may not fully understand the extent of their potential losses, or that these investments generally lack the government protections that accompany many of the traditional financial instruments and services that they’re used to.”
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