The Federal Reserve is set to release a virtual assets’ report before the end of the third quarter this year, according to the chair Jerome Powell
Yesterday Jerome Powell, Chair of the Federal Reserves in the US, delivered the semi-annual report on monetary policies before the House Financial Services Committee. He revealed that the government would be releasing a report covering stablecoins, Central Bank Digital Currencies (CBDCs) and crypto in September.
“We’re going to address digital payments broadly. It means stablecoins, it means crypto-assets, it means a CBDC,” Powell explained. “That whole group of issues and payment mechanisms, which we think is really at a critical point in terms of regulations.”
On the question of establishing a CBDC, he held that they would take the approach of openly consulting the public, including the congress, to determine the benefits and limitations of such a move. Further, Powell noted that the development of a government-controlled CBDC would likely short the relevance of privately-owned digital coins such as Bitcoin. The chairman also highlighted the need to establish regulations for stablecoins if they are to be a reliable way of conducting transactions.
“If they are going to be a significant part of the payments universe, which we don’t think crypto assets will be, but stablecoins might be, then we need an appropriate regulatory framework, which frankly we don’t have.”
On Tether (USDT), the Federal Reserves’ executive explained that the recent market behaviour suggested the need for regulation. Tether and Bitfinex have had a long-spanning war with the Attorney General’s office in New York. The legal woes came to an end earlier this year, with Bitfinex finally reaching a settlement agreement and incurring a fine of $18.5 million.
The controversy around Tether has partly been due to its stablecoin nature. Stablecoins are by design tied to fiat currencies in value. However, Tether appeared not to have been wholly backed by the dollar (as initially alleged) but rather derived most of its backing from debts and commercial paper.
The Federal Reserve chair has previously gone on with the uncertainty around the stance of the US government on CBDCs. Back in April, he noted that the US would not rush to decide on the CBDC conversation. In addition, he had also felt that the Chinese digital Yuan, which was a massive part of the conversation, would not be ideal for the US. The chairman has also in the past explained that without the pressure of becoming the first to develop a CBDC, the US is obligated to develop the best one.