Fed Chairman officially recognizes stablecoins as a form of currency

Unlike other cryptos, stablecoins inspire relatively more confidence among users. This is due to the stability of their value, which correlates with that of a fiat currency. However, their monetary status had never been officially recognized. At least, until Jerome Powell, Chairman of the US Federal Reserve (Fed), did so. Is this a turning point?

Stablecoins are a form of currency according to Jerome Powell

On Wednesday June 21, Jerome Powell made a surprising statement regarding stablecoins. According to the head of the Fed, these cryptos, used among other things to settle transactions, are a form of currency.

As such, they should be subject to greater regulatory intervention by the US central bank. At least, that’s the view he shared at a congressional hearing.

It should be noted that in many ways, Jerome Powell is somewhat stirring things up. Indeed, his statement that stablecoins constitute a form of currency is unprecedented. Until now, no U.S. official had publicly recognized the monetary nature of these cryptocurrencies.

Fed Chair Powell Says Central Bank Needs ‘Robust’ Role Overseeing U.S. Stablecoins

Federal Reserve Chair Jerome Powell testified in the House Financial Services Committee, saying Fed staff has been in talks with lawmakers on crypto legislation that is expected to be marked up in…

— Emotional (@emotional_ost) June 21, 2023

Stablecoins are expected to be the subject of further parliamentary discussions to establish the legislation that will be applied to them. The House Financial Services Committee has already scheduled the review of two cryptocurrency-related bills for the end of next month, although the outcome of this review remains uncertain.

It is worth noting that similar parliamentary debates were held last year on the question of cryptocurrency regulation. However, these discussions did not lead to concrete results, largely due to divergent opinions on the role of the Fed in this context.