Federal Reserve Chairman sees stablecoins role in US financial services
Jerome Powell confirmed that Fed doesn’t want any stifle in the financial innovations with Crypto & stablecoins roles.
Stablecoins play an important role in the Crypto industry to help Crypto investors to transfer funds from one crypto platform to another without any tension of third-party role. But under the lack of a regulation system, the majority of the stablecoin companies are facing major challenges. From time to time, stablecoin issuer companies urged their corresponding jurisdiction to bring a crypto regulation framework.
On 7 March 2023, In speaking during the semiannual report to the Senate Banking Committee, the Federal Reserve Chairman Jerome Powell said that Fed doesn’t want any kind of stoppage in the innovations via regulatory systems.
“We don’t want regulation to stifle innovation in a way that just favors incumbents and that kind of thing,” Powell said.
Powell said that the Fed is working to bring an extended & better form of regulation, to ensure the regulation of the financial institutions & their proper interaction with the crypto space.
“(We) are taking great care in the ways that they (financial institutions) engage with (the) whole crypto space and that they give us prior notice,” Powell added.
Further Fed chairman noted that stablecoins are more similar to the services of the banks and also they follow a similar kind of regulatory framework, so stablecoins need some attention in that respect.
US authorities vs Paxos
In the second week of Feb 2023, The United States Securities and Exchange Commission (SEC) sent a Wells notice to the BUSD stablecoin issuer company Paxos Trust. The SEC body alleged that BUSD was a security under its Howey test.
Further Paxos received orders from the New York financial watchdog to stop mining new BUSD stablecoin.
The whole matter acted as a catalyst to bring the stablecoin regulation system under the radar of critics.
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