The chairman of the Federal Reserve, Jerome Powell, is on record from Capitol Hill expressing his disinterest in digital coins. This was during a congressional hearing session that went on for two days. In his speech, the chair made it clear that the elimination of the use of cryptocurrency was the main motivation of the United States in deciding to launch its own Central Bank Digital Currency (CBDC).
With a specific focus on stablecoins, Jerome Powell was recorded saying that cryptocurrencies would be completely unnecessary if there had been a digital currency for the United States. Insisting that this was the only reason they were accepted, the chair clarified that crypto only exists because it is necessary.
Regulatory Worry over Lack of Crypto Control
The sentiments of Fed Chair Jerome Powell are shared by several people from the Central Bank together with lawmakers in the United States. The two groups of people have been making remarks about how stablecoins have been growing throughout the nation.
The stablecoin is one of the many cryptocurrencies existing in the crypto space today and represents a value associated with real assets such as valuable commodities like gold and diamond, or the currency of the United States.
The popularity of stablecoins is best expressed in how widely they are used in local and international transactions. Being a non-governmental digital token, the coin threatens Central Banks as they hold no control or regulation over the crypto space.
Nic Carter, the Founding Partner at Castle Island Ventures, supports that the Central Bank is right to feel scared because a huge majority of commercial banking activities have flipped over to embrace the crypto industry. This leaves a lot of transactions unregulated and therefore threatens the relevance of the Central Bank.
A digital dollar for the United States would serve as the US dollar that serves the market today. The digital dollar would not only be regulated and operate under a central authority. However, it would also have the unwavering trust and support of the Central Bank that governs the nation’s finances.
Powell Indecisive of Digital Dollar
Despite his dislike for the crypto space, the Fed Chair does not fully support that the United States introduce their digital token. According to him, the fact that we have around 11,000 cryptocurrencies in the market today is already too much. The introduction of one unique to the American market would be venturing into a market that is all too full as it is.
In his undecided position, Jerome Powell remains uncertain about whether the introduction of digital currency would be a worthy venture. Despite his stand, there is no doubt that the Federal Reserve will not be letting stablecoins, or any other crypto for that matter, operate in an uncontrolled manner.
Headed by Jerome Powell, the Federal Reserve holds firm to its conventional ways in which money belonging to the American people is reserved in the safest asset possible. Stablecoins do not offer the kind of security or guarantee that the Federal Reserve provides, which explains why Jerome’s sentiments have some truth in them.
In an uncontrolled state, cryptocurrencies are not very reliable. For cryptocurrencies to establish real-world significance in payments and transactions, a working structure must be set up to govern them. On the other hand, the crypto space may not be very open to this idea.
Regarding whether Jerome Powell is right, the best response would be that he is very wrong in comparing stablecoins or cryptocurrencies as a whole to CBDC and its “ideal” digital currency. The popularity of cryptocurrencies does not lie in the fact that they are digital. On the contrary, it is the fact that they are not hinged on bankers and political players that makes them truly valuable.