Federal Reserve chair Jerome Powell spoke on March 7 in front of a Senate Banking, Housing and Urban Affairs Committee.
During the hearing, he was questioned by Senator Cynthia Lummis (R-Wyoming) about permissionless distributed ledgers and whether they had any place within the financial system.
Powell said:
“There are real concerns about permissionless public blockchains, and the reason is that they’ve been so susceptible to fraud, to money laundering and all of those things. I think what you heard from the federal banking agencies in one of their reports was that they would tend to look at those as inconsistent with safety and soundness.”
On stablecoins, Powell said that with “appropriate regulation,” they could merge with traditional banks.
“Where stablecoin activity gets the same regulation as comparable products in different places, then there certainly could be a place for stablecoins in our financial services sector,” the Fed chair said.
Lummis also pressed Powell on the need for digital asset regulation. She compared the US to other jurisdictions like the UK, the EU, Switzerland and Singapore, all of which have moved in the last several years to create legislative frameworks for digital assets, while the US has lagged.
“I do think it would be important for us to have a workable legal framework around digital activities,” Powell added. “I think that is important and something Congress in principle, needs to do, because we can’t really do that.”
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