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Head of Federal Reserve Calls for Regulation of Stablecoins
In a recent development, Jerome Powell, the head of the US Federal Reserve System (FRS), emphasized the need for regulation of “stablecoins.” Speaking before the Committee on Financial Services of the House of Representatives, Powell expressed the view that stablecoins should be considered as a form of money and advocated for a strong federal role in overseeing their operations, as reported by The Block.
Powell stressed the potential risks of allowing the proliferation of private money creation at the state level without adequate regulation. He believes that the Federal Reserve should play an active role in approving the issuance of stablecoins within the United States. This stance aligns with his objective of preventing the Federal Reserve from having limited authority in this sector.
During the same hearing, Patrick McHenry, Chairman of the House Financial Services Committee, announced plans to vote on bills aimed at regulating cryptocurrencies and stablecoins in the second week of July. However, Powell expressed skepticism towards this proposal and the overall document.
The initial version of the stablecoin regulation bill, presented in April, focused on the activities of issuers and proposed comprehensive control measures. Subsequently, an updated version of the bill was put forward, which aimed to exclude the US Securities and Exchange Commission from jurisdiction over stablecoins. However, lawmakers criticized the bill during the congressional hearings, citing outdated information and calling for it to be updated before the next session.
Notably, the third version of the bill was introduced in June, with lawmakers proposing the Federal Reserve as the regulatory body responsible for overseeing the stablecoin industry. This new development mandates the regulator to establish future requirements for the issuance of such assets.