During a hearing on June 21, Congresswoman Maxine Waters asked whether stablecoin issuers should be licensed and regulated by the Federal Reserve. In response, U.S. Federal Reserve Chair Jerome Powell stated that the regulator views payment stablecoins as a “form of money” and believes central banks should supervise them.
Stablecoins as a New Form of Currency
Waters stated that stablecoins are a “new form of currency” that people have been using more and more as their preferred payment method. She questioned whether the Fed consider them to fall under its purview. She added that all banks and non-bank entities dealing with currency or payments should be regulated similarly.
The Fed’s Role in Determining the Future of Money
Powell believes that the “ultimate source of credibility in money is the central bank,” and the Fed should have a “robust federal role” in determining the future of any form of money, including stablecoins. He added that leaving the Fed with a weak role in allowing a lot of private money creation at the state level would be a mistake.
Implication for Private Companies Issuing Stablecoins
Powell did not provide specific details about the Fed’s view on regulating stablecoins. However, his last statement implies that the central bank does not view private companies issuing stablecoins favorably. Congress may push for new rules on a federal level in the coming months to bring stablecoins under the central bank’s supervisory net.
Federal Reserve Chair Jerome Powell has stated that the Fed views payment stablecoins as a form of money. He believes that central banks should supervise them and have a robust federal role in determining the future of any form of money. While Powell did not provide specific details about the Fed’s view on regulating stablecoins, his statement implies that the central bank does not view private companies issuing stablecoins favorably. Congress may push for new rules on a federal level in the coming months to bring stablecoins under the central bank’s supervisory net.