- US Federal Reserve Chairman Jerome Powell has acknowledge the staying power of cryptocurrencies in the US economy
- The Fed chief also called stablecoins “a form of money”
- Bitcoin (BTC) rallied over the $30,400 mark amid growing excitement from bullish developments
YEREVAN (CoinChapter.com) — Federal Reserve Chairman Jerome Powell made a groundbreaking statement acknowledging that cryptocurrencies have a “staying power” in the US economy. He also claimed the premier banking agency sees stablecoins as a form of money. Major cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), soared after his statement.
The statements from Fed Chairman Powell came as he answered some questions about cryptocurrency and stablecoins during his testimony before the House Financial Services Committee on June 21.
In response to Republican Congressman Warren Davidson’s question about whether Powell acknowledges that crypto, as an asset class, “has staying power in the US economy”, the Fed chairman replied in affirmative.
“It appears to have some staying power,”Powell concurred.
Representative Davidson also pointed out that the crypto market has experienced considerable volatility primarily due to the absence of legal clarity. Highlighting the actions of the Securities and Exchange Commission (SEC), he expressed hope that the committee will help bring about clarity for the sector and establish guidelines for the SEC to follow.
The lawmaker further stated that the committee intends to address this issue by introducing several bills, one of which focuses on stablecoins.
It would be apt to remember that Representative Davidson was among the lawmakers that introduced legislation to remove Gary Gensler as Chair of the SEC.
The Federal Reserve is the apex banking system of the country. The Chairman’s remarks serve as a significant endorsement of cryptocurrencies and their potential to play a pivotal role in the US economy.
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Fed sees stablecoins as a form of money
In a move that sent shockwaves across the crypto industry, Chairman Powell said the agency he heads sees stablecoins as a form of currency.
He made these remarks in response to a question from committee ranking member Maxine Waters regarding the proposed stablecoin bill. It is the first crypto legislation in the US initiated by the Republican party.
The bill, according to Waters, envisions the creation of “58 different licenses with federal regulatory approval over only two of the licenses.” She further emphasized that the remaining licenses would be issued by states, territories, and other jurisdictions.
In response, Powell emphasized the need for strong federal oversight when it comes to private companies issuing tokens tied to the value of a sovereign currency, such as the US dollar.
“We do see payment stablecoins as a form of money, and in all advanced economies, the ultimate source of credibility in money is the central bank. We believe that it would be appropriate to have quite a robust federal role in what happens in stablecoin going forward. Allowing a lot of private money creation at the state level would be a mistake,”Powell said.
The excitement following the Fed Chairman’s comments sent the crypto prices soaring. The price of Bitcoin, the leading token, rallied to reach a new two-month high, impacting the performance of its peers.
According to CoinMarketCap, BTC briefly crossed the $30,400 mark before colling down to steady just above the $30,000 mark. The jump marked an over 15% rally in the past 3 days alone. At the time of writing, BTC exchanged hands just below $30,100.
Bitcoin’s rally also coincided with the spike in interest from institutional investors. In recent developments, fund management company BlackRock applied for a Bitcoin ETF. There are reports that Fidelity will soon follow suit. Additionally, both WisdomTree and Invesco have applied for their own Bitcoin ETFs.