Authorities in the US continue to discuss stablecoins and their role in the US economy.
The recognition of payment stablecoins as a type of currency by the US Federal Reserve Board was confirmed by Chairman Jerome Powell during the House of Representatives Financial Services Committee’s semi-annual hearing on Federal Reserve policies, which took place on June 21st.
Chairman Powell's remarks were prompted by a query from committee ranking member Maxine Waters about proposed legislation concerning stablecoins. This Republican-originated bill, if enacted, would be the first of its kind to regulate cryptocurrencies in the United States.
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Waters expressed her concerns about the legislation, stating that it proposes the establishment of "58 different licenses," with only two of these falling under federal jurisdiction.
The remaining licenses would be granted by states, territories, and other entities, an approach that she believes overextends the concept of state preemption. Responding to these concerns, Chairman Powell expressed his opinion that:
We do see payment stablecoins as a form of money, <…> and we believe that it would be appropriate to have quite a robust federal role in what happens in stablecoin going forward.
He further cautioned against encouraging the large-scale creation of private currency at the state level.
In making these statements, Powell’s viewpoint deviates from that of Gary Gensler, Chairman of the Securities and Exchange Commission (SEC). Last year, Gensler suggested at a Senate Banking Committee hearing that stablecoins might require registration and oversight, asserting that Bitcoin (BTC) is the only cryptocurrency that was not security.
Powell's stance also differs from Rostin Behnam, Chair of the Commodity Futures Trading Commission (CFTC), who believes stablecoins will be classified as commodities.
While there is no precise Federal Reserve definition of what constitutes money, it is generally regarded as a medium of exchange. Commodities and securities, on the other hand, have intricate definitions under US law.
In the rapidly evolving landscape of digital finance, the increasing recognition of stablecoins as a type of currency requires more thorough discussion and understanding. Ensuring appropriate and equitable regulation remains a challenge for legislators.
