Federal Reserve Chair Jerome Powell recently made remarks on cryptocurrency, reflecting the central bank’s cautious but increasingly involved stance toward the evolving digital asset market. Powell acknowledged the growing role of crypto in financial systems but emphasized the importance of strong regulatory oversight to mitigate risks associated with volatility, illicit activity, and lack of transparency in some sectors of the industry.
He reiterated that while decentralized finance (DeFi) and cryptocurrencies show innovation potential, they also present serious concerns, especially regarding investor protection and systemic risk if left unregulated. Powell emphasized that stablecoins—crypto assets pegged to fiat currencies—must be subject to rigorous regulatory standards if they are to play a meaningful role in the broader economy. He highlighted that any stablecoin used as a means of payment must be as reliable as traditional money and subject to similar safeguards.
Powell also noted that the Federal Reserve continues to study the feasibility of a U.S. central bank digital currency (CBDC), but any decision will require careful consideration, public consultation, and Congressional support. He emphasized that innovation should not come at the cost of stability, and a clear regulatory framework is essential for both protecting consumers and supporting responsible financial innovation in the crypto space.
