Fed Chair Powell Says Crypto Needs New Regulation Citing Risks to US Financial System – Regulation Bitcoin News

Jerome Powell (chairman of the Federal Reserve) says that crypto needs new regulation. He cites the risks it poses to the U.S. financial systems and the potential for financial instability.

Powell, Fed Chair: New Crypto Regulation

Jerome Powell, Chairman of the Federal Reserve, spoke Wednesday about the necessity to create new regulations for cryptocurrency during the Bank for International Settlements’ panel discussion.

Fed Chair said that the new digital money forms, which include cryptocurrencies and stablecoins are subject to new laws in order to protect consumers.

Our existing regulatory frameworks were not built with a digital world in mind … Stablecoins, central bank digital currencies, and digital finance more generally, will require changes to existing laws and regulation or even entirely new rules and frameworks.

Powell reiterated his stance that crypto ought to follow the “same activity, same regulation” principle. Powell suggested regulation of stablecoin-issuers as banks in October 2013. “Stablecoins are like money market funds. They’re like bank deposits … and it’s appropriate that they be regulated, same activity, same regulation,” he opined.

He added that “It’s highly likely that digital financial activities that are currently outside the regulatory perimeter” will be regulated, “which is necessary to level the playing field, keep the trust of users, protect consumers and all that.”

Federal Reserve Chairman James McClure acknowledged the fact that electronic payments will become cheaper and more efficient with new technology. But, the Federal Reserve chairman pointed out that these new technologies present risk to the U.S. banking system and can destabilize financial institutions.

Powell further stressed that crypto assets “have been used to facilitate illicit activity,” such as money laundering. He added:

It is important to stop this from happening so that those innovations that survive and gain broad acceptance are the ones that offer long-term value.

The Fed chair also warned that Americans who buy cryptocurrencies and stablecoins “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.”

What do you think about Fed Chair Powell’s comments? Please leave your comments below.

Kevin Helms

Kevin, a student of Austrian Economics and a Bitcoin evangelist since 2011, was one of the first to discover Bitcoin. His main interests are in Bitcoin security, open source systems, network effects, cryptography, and intersections between economics, cryptography, and Cryptography.