Powell: Stablecoin Regulation Belongs to the Fed
Source: American Banker
Federal Reserve Chair Jerome Powell said stablecoins are a type of private money and need to be regulated as such.
During a panel discussion about digital asset regulation hosted by the Banque de France on Tuesday morning, Powell said stablecoins are only as stable as the fiat currency to which they are pegged. In the case of dollar-denominated stablecoins, that leads back to the Fed.
"The central bank is and will always be the main source of trust behind money. Stablecoins essentially borrow that trust from the underlying issuer, and in many cases, these are dollar stablecoins, so they're really borrowing that trust," he said. "These are private forms of money. They will be subjected to runs if their reserves are not full of very high-quality assets, so there's a regulatory job to be done there."
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