US Federal Reserve Chairman Jerome Powell said banks should be cautious when entering the digital currency sector.
At a hearing before the Senate Banking Committee on Tuesday, the Chairman of the Federal ReserveFed) Jerome Powell said that the best he could come up with was that he hoped for something useful and innovative amid the turmoil of the crypto industry.
“We have to be open to thinking that cryptocurrency has technology that can contribute to effective innovation that makes people’s lives better,” he told the committee members.
“The Fed doesn’t want to stifle innovation,” he added.
Previously at sessions, Powell was repeatedly asked to address crypto-related issues. And tomorrow, before the House Financial Services Committee, cryptocurrency will also be the subject of discussion.
“We have witnessed a remarkable set of events in the crypto space. In the last year there has been quite a bit of turmoil with crypto companies collapsing and major scams being exposed. So there’s a lot of crypto activity that suggests financial institutions should be cautious when doing things in the crypto space,” Powell said.
The Fed and other US banking regulators have repeatedly issued policy statements and interpretations, all of which serve as a stark warning to banks that they are following suit. keep a close eye on every move in the crypto industry.
The Fed chair has said that Congress needs to step in strongly to provide a “workable regulatory framework” for digital assets in the United States, citing stablecoins as an important area where it needs to be. monitored. Powell said there will be room for stablecoins in the financial sector if they get “proper regulation,” but he argued that “there are real concerns about permissionless public blockchains and the reason they are very susceptible to fraud, money laundering…”
Following his comments on Tuesday that inflationary pressures were mounting higher than expected, bitcoin, seen as a riskier asset to suffer as interest rates rise, fell about 2.1% from 24 over the past hour, down below $21,982 at the time of writing.
“If data indicates that policy tightening is needed, the Fed will be willing to increase the pace of rate hikes,” Powell said.
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