Federal Reserve Chairman Jerome Powell speaking on a panel by the Bank for International Settlements, warned that cryptocurrencies and stablecoins present risks to the whole US financial system and, therefore, require "new rules to protect consumers," The Associated Press reports. Although new types of money can make payments cheaper and faster, they also destabilize existing financial institutions, the Fed head reiterated.
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"Our existing regulatory frameworks were not built with a digital world in mind. Stablecoins, central bank digital currencies, and digital finance more generally, will require changes to existing laws and regulation or even entirely new rules and frameworks," Powell said.
However, Powell did not specify about what regulations might be needed for cryptocurrencies. He said though that the cryptocurrency market should follow "the same activity, same regulation," citing banking standards.
In October last year, Powell said that the Federal Reserve sees no need to ban stablecoins or cryptocurrencies like China did. Testifying in Congress, Powell said he had misspoken when he tried to explain the regulator's position regarding the regulation of the digital currencies market. The Fed Chair particularly said the financial watchdog "has no intention to ban" cryptocurrencies like bitcoin (EXANTE: Bitcoin) or stablecoins.
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