Federal Reserve Chair Jerome Powell expressed support for cryptocurrency legislation before Congress on Tuesday, noting that the United States would benefit from the bills currently under consideration.
Powell said, "It's great to see the bills moving." "We need a framework for stablecoins."
Last week, lawmakers in the Senate passed the #GENIUS , a bill that would establish a framework for the issuance and trading of stablecoins. The bill has garnered bipartisan support and could be signed by President Donald Trump into law this summer if it passes the House of Representatives. Meanwhile, lawmakers in the House are considering the #CLARITY , a bill to structure cryptocurrency markets.
Powell's approval of a stablecoin framework comes after guidance from the Federal Reserve on Monday. The Federal Reserve stated that it would not consider "reputational risks" when examining banks, a factor cited by regulators against banks interested in cryptocurrencies in the past.
Powell stated, echoing comments he made in January: "Our view is that banks decide who their customers are." "Banks also have the freedom to engage in cryptocurrency activities, as long as they do so in a way that protects safety and soundness."
For months, Republican lawmakers have been investigating allegations of "banking discrimination" under the Biden administration, seeking to clarify whether certain individuals and entities have been cut off from the financial system due to their involvement in specific industries, including cryptocurrencies. Powell noted that the Federal Reserve became increasingly aware of banking discrimination last year.
He said, "Over the course of 2024, we have come to the view that this is a serious issue that we need to address," adding that the issue has become more urgent in "the past two years."
Since Trump's re-election, traditional financial institutions have embraced the cryptocurrency space as lawmakers move towards clearer regulations. Among the signs of the banks' new openness, JPMorgan's CEO Jamie Dimon, a skeptic of cryptocurrencies, said last month that customers can now buy Bitcoin. Powell called for stricter regulations on stablecoins in 2021, stating they should be regulated "in similar ways" to bank deposits and money market mutual funds, as they could become "an important part of the payments landscape" someday.
Although the U.S. central bank has been monitoring developments in the cryptocurrency space for years, particularly regarding central bank digital currency, Powell noted that companies on Wall Street have recently changed their stance on this technology.
He said, "What I see is a very significant change in tone, which indeed reflects the evolving thinking and the evolving situation of the cryptocurrency industry." "I expect, over time, to see more activity."