Is There A Threat?
Powell noted that emerging forms of digital money, like cryptocurrencies and stablecoins, pose threats to the US financial system and will necessitate the adoption of additional consumer protection measures. Powell reaffirmed his position that cryptocurrency should adhere to the “same activity, same regulation” premise.Powell Says DeFi Can Improve Finance Sector
Despite this, the Fed chairman acknowledged that distributed technology and DeFi have the potential to improve the payment system’s efficiency and foster a more competitive financial sector.Crypto total market cap at $1.94 trillion on the daily chart | Source:
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Stablecoins are a type of cryptocurrency that are typically backed by the dollar or a commodity such as precious metal. CBDCs are digital representations of dollars or other fiat currencies that governments issue. The Fed is exdigital currencies but has not yet decided whether to issue them. In January, it published a study on stablecoins.Biden’s Executive Order
US President Joe Biden signed an executive order earlier this month directing the Treasury Department and other federal agencies to conduct a study on the impact of cryptocurrency on economic stability and national security. Biden’s directive comes as many Democratic legislators, notably Massachusetts’ Elizabeth Warren, have expressed worry that cryptocurrency could be used to circumvent US sanctions against Russia. As part of the executive mandate, the Treasury is leading a report on a CBDC in consultation with the Departments of Justice, Commerce, and State, as well as the Office of Management and Budget, Homeland Security, and the Director of National Intelligence, to determine whether the US should pursue a digital dollar.Suggested Reading | Bitcoin Breaks Past The $40,000 Barrier Again – Can It Sustain The Momentum?
Featured image from CryptoSlate, chart from TradingView.com