Jerome Powell, chairman of the Federal Reserve, reaffirmed the necessity of strict central bank supervision in the House Financial Services Committee’s discussion on developing stablecoin legislation.
Stablecoins and CBDCs were the main focus of committee members’ questions about digital assets to Powell.
Powell emphasized the importance of central bank credibility in the context of privately issued stablecoins, stating that “the ultimate source of credibility in money is the central bank.”
In terms of stablecoin regulation, he continued, “We think it would be appropriate to have quite a robust federal role.”
Representative Zack Nunn highlighted concerns about user privacy protection if the US went forward with a CBDC. Nunn expressed dissatisfaction with the Fed’s unrestrained access to American consumer behavior.
Powell stated that “We would not support individual accounts at the Federal Reserve.” “If we were to support a CBDC in the future, and we’re a long way from doing so, it would be one that we were facilitating through the banking system rather than the Fed.”
Powell’s comments suggest that if the Fed in the future supports a CBDC it will be the one that is issued through banks rather than one that is issued directly to individuals.
The panel will hold a markup session for two cryptocurrency bills, including the hotly contested stablecoin legislation and a comprehensive bill aimed at creating market structure and oversight for cryptocurrencies in the United States, according to hearing Chairman Patrick McHenry (R-N.C.).
This represents a huge breakthrough, as no meaningful crypto legislation has ever before passed through a committee in the House or Senate.
The committee’s top Democrat, Rep. Maxine Waters, raised concerns about the Republican proposal, noting that it would drastically restrict the regulatory Reserve’s control and emphasizing the necessity for strict regulatory control for nonbank stablecoin producers.
Powell is back on Capitol Hill this week to deliver his twice-annual policy report. On Wednesday, he testified before the House Financial Services Committee. On Thursday, he will appear before the Senate Banking Committee. The hearings are a chance for lawmakers to grill Powell on the state of the economy and the Fed’s monetary policy.