Federal Reserve Chair Jerome Powell said Tuesday that stablecoins will need greater regulation as they become more widely used by consumers.
Fed’s Powell urges broader regulation for stablecoins
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell said Tuesday that stablecoins will need greater regulation as they become more widely used by consumers.
Powell also said, in virtual remarks to a conference on digital finance in Paris, that the Fed hasn’t yet decided on whether to proceed with a digital dollar.
The Fed’s sharp interest rate increases this year, Powell said, have contributed to the collapse of some stablecoins and big drops in the value of cryptocurrencies, a phenomenon some traders have dubbed “crypto winter.” Stablecoins are digital tokens pegged to the value of traditional financial instruments, often the dollar. In May, the stablecoin TerraUSD collapsed, wiping out $40 billion investor funds.
Powell said that higher interest rates have revealed the “significant structural issues” that exist in decentralized finance, a broad term that encompasses stablecoins, crypto currencies, and other new technologies.