Powell says the Fed wants a strong role in overseeing stablecoins as a form of money.
During the semi-annual hearing on Fed policy held by the House of Representatives Financial Services Committee on June 21, Chair Jerome Powell stated that payment stablecoins are considered a form of money by the United States Federal Reserve Board. This statement was made in response to committee ranking member Maxine Waters who asked for Powell’s reaction to the proposed stablecoin bill, which would be the first crypto legislation in the U.S. if passed and originated with the Republicans. Waters expressed her concern that the bill would create “58 different licenses with federal regulatory approval over only two of the licenses,” with the remaining licenses issued by states, territories, and other jurisdictions. Powell responded by saying that a robust federal role in what happens in stablecoin going forward would be appropriate and that allowing a lot of private money creation at the state level would be a mistake. These comments by Powell contradict Securities and Exchange Commission (SEC) Chair Gary Gensler’s position that stablecoins may require registration and regulation and that all cryptocurrencies except Bitcoin (BTC) are securities. Commodity Futures Trading Commission (CFTC) chair Rostin Behnam’s claim that stablecoins will be determined to be a commodity also differs from Powell’s position. On June 21, former CFTC Chair Chris Giancarlo expressed his opinion on the bill in an editorial in The Hill, stating that all licensing authorities would have the discretion to coerce stablecoin protocols to deny services to lawful but politically disfavored businesses. Giancarlo called this fact a “glaring omission” that could enable a government policy similar to the Obama administration’s Operation Choke Point. He suggested that providing government licensing authorities with no discretion to pick and choose among otherwise lawful activities and condition licensure on the stablecoin’s denial of legal transactions would be the simple solution to this problem.