The United States Federal Reserve Chairman, Jerome Powell said regulation of the cryptocurrency market is critical, but the bank has no intention to outrightly ban bitcoin (BTC) or other digital currencies.
Powell is also the chairman of the Federal Open Market Committee, which is responsible for determining United States monetary policy.
According to him an outright ban on digital assets similar to what China did, isn’t something he’s considering when he responded to a question from Republican Representative, Ted Budd.
Rep. Budd asked about safety regulations for stablecoins and about the central bank’s ongoing discussions about a so-called “digital dollar” in response to Powell’s comments.
Stablecoins are outside the regulatory jurisdiction though they are similar to money market funds and to bank deposits.
Powell said, “it is necessary for them to be regulated.”
Earlier this month, the Federal Open Market Committee decided to leave existing stimulus programs intact while signaling a possible wind-down of the COVID-19-induced bond purchase program. Stocks and crypto assets are among the risk assets that appear to have been impacted by the warning
Policymakers have been considering a central bank digital currency for a while, but they are still undecided about its implementation. A number of studies have been commissioned by the central bank on the advantages and potential roadblocks of issuing a CBDC.
The Fed isn’t in a rush to join the trend, despite several central banks launching their own CBDCs, said Powell earlier.
He said further, that the focus for the Fed is getting things right, rather than speed while noting that the US does not lag behind other OECD countries in CBDC innovation.
Government policymakers are pushing an anti-crypto narrative that features CBDCs at the forefront.