FED Chairman Jerome Powell underscored the need for a robust federal role in creating a comprehensive regulatory framework for stablecoins.
Testifying in front of the House Financial Services Committee, Powell said the FED views payment stablecoins as money and hence doubles down on regulating the sector.
“We believe that it would be appropriate to have a quite robust federal role in what happens in stablecoins going forward, and leaving us with a weak role and allowing a lot of private money creation at the state level would be a mistake.”
The FED chair was responding to questions from Rep. Maxine Waters (D-Calif.), who raised objections to her Republican counterparts’ suggestion that state regulators be given the authority to regulate stablecoin issue,
Waters claimed that the most recent Republican legislative proposal would leave the Fed “severely hamstrung” and that a high government floor for regulation of nonbank stablecoin issuers is necessary.
In early June, the Republican chair of the House Financial Services Committee flout a new proposal for overseeing stablecoins.
The draft, shorter than its earlier versions called for developing regulations for the issuance of stablecoins while still allowing state regulators to monitor the businesses issuing the tokens.
The bill grants the Fed a few more powers than the Republican’s earlier proposal, including the ability to take emergency action against state-regulated issuers. Additionally, states could delegate their oversight responsibilities to the federal watchdog.
However, Waters said that “This proposal takes state preemption to a whole new level,” pointing out how a stablecoin approved in one jurisdiction might subsequently be offered for sale in other states regardless of whether those regulators gave their approval or not.
FED Chair- No Prospect of CBDC in the US
Along with Waters, Powell expressed skepticism about the state’s approval and preemption of stablecoin issuers, both of which are now included in a Republican-led proposal that is being discussed at the committee level.
Powell also addressed whether the United States should create a central bank digital currency known as CBDC in his testimony on June 21, stating, “We’re a long way from this.”
Meanwhile, the International Monetary Fund, or IMF is working towards creating a unified global CBDC platform to facilitate easier transactions between countries, TronWeekly reported.
IMF Managing Director Kristalina Georgieva emphasized the importance of fostering interoperability in order to prevent further economic fragmentation.