The US Federal Reserve Board considers payment stablecoins a form of moneyas stated by its chairman, Jerome Powell, during questioning on June 21 at the House Financial Services Committee’s semiannual hearing on Federal Reserve policy.
Powell’s comments came in response to the committee’s ranking member, Maxine Waters, who asked him for his reaction to the stablecoin bill, which originated with Republicans and would be the first cryptocurrency legislation in the US. .if approved.
Waters told Powell that the bill would create “58 different licenses with federal regulatory approval on only two of the licenses.” The remaining licenses would be issued by states, territories and other jurisdictions, “taking state pre-eminence to a whole new level,” he said. Powell replied:
“We see payment stablecoins as a form of money, […] And we think it would be appropriate to have a fairly strong federal role in what happens with stablecoins going forward.”
“To allow a lot of private money creation at the state level would be a mistake,” he added.
Commenting on the bill, Powell took a stance contrary to that of Securities and Exchange Commission (SEC) Chairman Gary Gensler. Speaking at a Senate Banking Committee hearing last year, Gensler said that stablecoins may require registration and regulation, and he has repeatedly stated that all cryptocurrencies except Bitcoin (BTC) are values.
Powell’s position aligns no better with CFTC Chairman Rostin Behnam’s assertion that stablecoins will be determined to be a commodity. There is no easily accessible definition of money for the Fed, but it is commonly considered a medium of exchange. The commodities are define in US law as “property and items […] and all services, rights and interests […] on which contracts for future delivery are currently or in the future being negotiated”. definition of value is much more complex.
#TODAY @ 10 AM – Ranking Member @RepMaxineWaters leads Democrats as the full Cmte holds a hearing entitled “The @federalreserve‘s Semi-Annual Monetary Policy Report.”
: https://t.co/eLea11sV1m
: https://t.co/0bTBgQgsZ0— US House Committee on Financial Services (@FSCDems) June 21, 2023
Also on June 21, former CFTC Chairman Chris Giancarlo spoke out about the bill in an editorial on The Hill. In your opinionall licensing authorities would have “the discretion to coerce stablecoin protocols to deny services to legal but politically disadvantaged companies.” He called this a “blatant omission” that could allow a government policy similar to the Obama administration’s Operation Choke Point. Giancarlo said:
“The simple solution to this problem is to provide that government licensing authorities have no discretion to choose between otherwise legal activities and to condition the license on the denial of legal transactions by the stablecoin.”
Otherwise, “stablecoin transactions will be terribly beholden to the changing political winds in Washington,” Giancarlo said.
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