Cryptocurrencies do not pose serious risks to financial stability, and stablecoins, if properly regulated, could become a useful part of the financial system, said US Federal Reserve Chairman Jerome Powell.
However, according to the head of the US Federal Reserve System, cryptocurrencies are “really speculative assets.”
Speaking at a press conference after the Fed announced it would accelerate the pace of its tapering of bond purchases and penciled three hikes of its benchmark interest rate in 2022, Powell reiterated his skepticism about cryptocurrencies:
“I do think [crypto assets] are risky, [as] they’re not backed by anything. And I think there’s a big consumer issue for consumers who may or may not understand what they’re getting.”
Powell also added that he supports the position of the working group under the US presidential administration, which called on Congress to speed up work on a bill that would oblige stablecoin issuers to comply with requirements, like banking organizations.
“Stablecoins can certainly be a useful, efficient consumer serving part of the financial system if they’re properly regulated. And they have the potential to scale particularly if they were to be associated with one of the very large tech networks that exist. And right now they aren’t.”
Meanwhile, bitcoin approached $49,000 on investor concerns about a cutback in the US economic stimulus program and heightened inflationary risks.