Federal Reserve Chair Jerome Powell said on Wednesday that the U.S. central bank should play a “robust federal role” in overseeing stablecoins, a sizable slice of the overall crypto market that legislators are trying to craft rules for. Powell also remarked that cryptocurrencies, like Bitcoin, have "staying power."
His comments came on Capitol Hill during a semiannual hearing on monetary policy held by the Republican-led House Financial Services Committee and led by Patrick McHenry (R-NC).
Responding to a question posed by Maxine Waters (D-CA) on stablecoins, Powell said the technology—where tokens pegged to the price of a sovereign currency like the dollar and issued by private companies—should have strong federal oversight.
“We do see payments stablecoins as a form of money, and in all advanced economies, the ultimate source of credibility in money is the central bank,” Powell said. “We believe that it would be appropriate to have quite a robust federal role in what happens in stable coins going forward.”
Waters raised concerns that the Fed would be “hamstrung” to do anything if stablecoin issuers could register directly with states—an option currently included in the draft legislation on stablecoins.
Powell signaled the Fed thinks it’s an important part of the regulatory landscape for tokens collateralized by dollars and said, “leaving [the Fed] with a weak role and allowing a lot of private money creation at the state level would be a mistake.”
In 2021, Powell said before Congress that stablecoins could be a worthy part of the “payments universe,” as opposed to any other type of crypto asset. He went on to say that stablecoins should be regulated in a way that mirrors money market mutual funds and bank deposits.
Since then, several bills that would address stablecoin regulation have stalled out. But after holding a session where lawmakers can iron out proposed changes in July, McHenry said the current stablecoin bill that’s in the works will be advanced to the Senate if a positive consensus is reached.