changes to existing laws and regulation or even
entirely new rules and frameworks.”
Stablecoins are a type of cryptocurrency usually
tied to the dollar or a commodity such as
gold. Central bank digital currencies are digital
forms of dollars or other currencies, issued by
governments. The Fed is researching digital
dollars but has not yet made a decision on
whether to issue one. It released a study on
stablecoins in January.
Powell did not provide any details of what
kind of regulations might be needed. He did
say that they ought to follow the principle of
“same activity, same regulation,” meaning that
transactions outside the traditional banking
system should be regulated the same as they are
when executed by banks.
Earlier this month, President Joe Biden signed
an executive order directing the Treasury
Department and other federal agencies to
study the impact of cryptocurrency on financial
stability and national security.
His order came as several Democratic senators,
including Elizabeth Warren from Massachusetts,
have raised concerns that crypto could be used
to evade U.S. sanctions on Russia.
In his remarks, Powell outlined several risks
that stem from the growth of digital finance,
including to consumers and the broader
financial system.
Americans who buy stablecoins or crypto “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,” Powell said.