In an exclusive meeting with the House Financial Services Committee, Jerome Powell, the Chairman of the Federal Reserve, voiced his support for the creation of a legislative framework specifically designed for stablecoins. “We need a framework for stablecoins [and I’m] very supportive and am glad that we are close,” Powell conveyed behind closed doors to House Democrats.

The Federal Reserve’s Commitment to Oversight

Chairman Powell’s recent engagement with lawmakers underlines the Federal Reserve’s unwavering dedication to establishing stringent regulations for stablecoins and Central Bank Digital Currencies (CBDCs). He stressed the importance of the Federal Reserve’s role in maintaining a credible and robust monetary system, particularly when it comes to the integration of digital currencies.

Legislative Authorization of CBDCs

Discussing the necessity of legislative action for CBDCs, Powell stated, “If we’re going to have a CBDC, Congress needs to authorize it,” highlighting the need for a formal legal foundation before any potential implementation of a CBDC can proceed.

Previous Advocacy for Stablecoin Regulation

The topic of stablecoin regulation is not new to Powell’s agenda. In a monetary policy hearing in June 2023, he reiterated the Federal Reserve’s position on the necessity of having a credible central bank to back digital payment systems.

Advancements in Cryptocurrency Legislation

In July 2023, the House Financial Services Committee took a significant step by approving two critical bills: The Financial Innovation and Technology for the 21st Century Act and the Blockchain Regulatory Certainty Act. The former establishes a registration framework for cryptocurrency firms with regulatory bodies like the CFTC or SEC and provides a certification process for decentralized projects. The latter, a bipartisan effort, seeks to streamline regulations for blockchain-based entities, defining the criteria for those considered money transmitters.