In an important policy indication, Jerome Powell, the chairman of the Federal Reserve, said that although there is a need for the federal government to regulate issues related to the cryptocurrency market, there are no ongoing deliberations regarding putting a blanket ban on digital currency and allied assets. His response has come in the wake of a question put forth by Ted Budd, the Republican representative of North Carolina.
Replying to the query of the legislator, Powell said that, unlike China, the country is not looking to put a blanket ban on cryptocurrency assets. He also talked about the regulatory issues related to stablecoins and the ongoing deliberations in relation to the central bank digital currency (CBDC) that could manifest in the form of a digital dollar.
Acknowledging the need to regulate stablecoins, Powell said that it is important to strike a middle path when it comes to regulating cryptocurrency and digital assets. A lot of research is currently being conducted by policymakers and experts on the CBDC, but the final call is yet to be taken by the government. The specific issues related to the potential advantages and demerits of the CBDC have not been fully discovered by the authorities yet and require extra research.
Powell is in charge of the affairs of the Federal Open Market Committee, which is concerned with policy decisions related to the monetary policy of the country. In an important decision that had been made earlier this month, the committee decided to keep on pushing growth with the help of the current stimulus program. But it also said that the bond purchase related to this specific stimulus program is going to wind down very soon. This has somewhat impacted the fortunes of cryptocurrencies as well as stocks, with both categories facing some negative impact out of this development.