Fed should play role in regulating stablecoins, Chair Powell says

Quick Take

  • The Federal Reserve chair said that payment stablecoins are money, and that the central bank should play a role in approving their issuance in the U.S.
  • A top House Democrat sounded skeptical of the current draft bill to create a comprehensive framework for stablecoins.

Legislation to create a comprehensive regulatory framework for stablecoins in the U.S. could be approaching a speed bump, with Federal Reserve Chair Jerome Powell arguing for a robust federal role in the regulation of the sector.

“We do see payment stablecoins as money,” he said in testimony in front of the House Financial Services Committee on Wednesday, adding that the central bank should play a role in approving stablecoin issuance. “We believe that it would be appropriate to have a quite robust federal role in what happens in stablecoins going forward, and leaving us with a weak role and allowing a lot of private money creation at the state level would be a mistake.”

Powell sounded skeptical of state approval and preemption for stablecoin issuers, currently part a Republican-led proposal set for debate at the committee level.

Top Democrat is also concerned

The top Democrat on the House Financial Services Committee, Rep. Maxine Waters, also sounded critical of the proposal from her Republican counterparts to allow state regulators to approve stablecoin issuance.

“This proposal takes state preemption to a whole new level,” Waters said, referencing how a stablecoin approved in one state could then be sold across the country, whether or not other state regulators s