Regulation
Fed Chair Powell Expresses Strong Support for Stablecoin Regulation
During a recent congressional hearing, the chairman of the Federal Reserve Jerome Powell expressed keen interest in having stablecoin legislation passed before the end of the year.
The Federal Reserve’s Commitment to Stablecoin Regulation
Federal Reserve Chairman Jerome Powell recently spoke out in favor of regulating stablecoins. In response to a question from Representative Wiley Nickel, Powell said the Federal Reserve remains open to working with Congress on regulating stablecoins.
“We were very happy to be part of this process and appreciate being involved. Having an appropriate stablecoin framework is critical to us and we are fully committed to assisting you in achieving this goal,” Powell said.
This commitment highlights the need to create a legal framework for the provision of stablecoin services to improve the stability and security of transactions within the United States. This will now be followed by the legislative process in which various financial regulators and legislators will play an active role.
Bipartisan effort for a regulatory framework
THE Lummis-Gillibrand Payment Stablecoin Act was proposed by Senators Cynthia Lummis and Kirsten Gillibrand in April as a comprehensive bill to regulate payment stablecoins. The concept of this bipartisan bill is to regulate the market in a way that protects consumers and promotes innovation without threatening the supremacy of the dollar.
The new legislation replaces the Responsible Financial Innovation Act (RFIA) of 2022, focusing on the regulation of payment stablecoins.
According to the new bill, a “payment stablecoin” is any crypto-asset designed to be used as a medium of exchange or means of payment and is redeemable for a fixed amount of U.S. dollars or has a stable value equivalent to the U.S. dollar. The bill does not cover stablecoins that are pegged to non-U.S. dollars or other forms of assets.
Backlash and support
The introduction of this law has garnered both support and criticism from the financial and technology sectors. While some have applauded it as a means of restoring sanity to the industry and protecting consumers, others have raised concerns about the potential negative impact on innovation.
Furthermore, the proposal Stablecoin regulation It also raised concerns about its impact on First Amendment rights. Coin Center, a cryptocurrency advocacy group, opposed the bill, arguing that the ban on algorithmic stablecoins is problematic.
Jerry Brito, CEO of Coin Center, applauded the government for seeking to regulate stablecoins, but expressed some concerns about how the bill might impact innovation and free speech.
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