United States Federal Reserve chairman Jerome Powell offered his thoughts on the cryptocurrency industry at a Tuesday Senate Banking Committee meeting.
He hoped the Web3 technology could feature “productive innovation that makes lives better” and that the Fed did not want to “stifle innovation.”
In his statement, he said,
“We have to be open to the idea that – somewhere in there – there is technology that can be featured in productive innovation that makes people’s lives better […] We don’t want to stifle innovation.”
Powell and the Crypto Space
The news comes after Powell discussed concerns over the cryptocurrency industry in his two-day testimony, which is set to continue up to Wednesday.
He added that the Fed had seen a “remarkable set of events in the crypto space” and “quite a lot of turmoil” over the last year due to multiple fraud and bankruptcy cases.
He added: “We see in crypto activity lots of things that suggest that regulated financial institutions should be quite cautious in doing things in the crypto space.”
The news comes as banking regulators in the US have cracked down on cryptocurrency firms such as now-defunct crypto exchange FTX, Voyager Digital, Genesis, and Terra/Luna, among others.
Additionally, Silvergate Bank proved risky to the crypto and banking industries after regulators found it had facilitated transactions for FTX days before the latter collapsed into bankruptcy.
A Workable Framework?
Speaking further, Powell called for a “workable legal framework” for US digital assets, adding,
“People are going to assume when they deal with something that looks like a money market fund that that has the same regulation as a money market fund or a bank deposit. So stablecoins need some attention in that respect.”
Concluding, he said that stablecoins could continue in the financial sector with “appropriate regulation.” Ha added that there were “real concerns about permissionless public blockchain” which were “so susceptible to fraud, to money laundering and all of those things.”
