Federal Reserve Chair, Jerome Powell, has called for a regulatory framework for stablecoins as this type of assets might be a "significant part" of the payments universe, Bloomberg reports. Speaking at the House Financial Services Committee, Powell warned stablecoins are similar to bank deposits, however, they have no regulation.
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"We have a pretty strong regulatory framework around bank deposits, for example, or money market funds. That does not exist really for stablecoins," Powell noted.
He also expressed doubt that cryptocurrencies might become a big part of the payments. Nonetheless, a digital US currency could undercut the need for private alternatives. He added that a discussion paper on central bank digital currencies could be released in early September this year.
Previously, the Bank of England (BoE) emphasized the need for stricter rules for stablecoins if these payments start to become widely used. According to the BoE Governor, Andrew Bailey, the prospect of stablecoins as a means of payment and the emerging propositions of CBDCs have generated a "host of issues."
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