Powell Greenlights Stablecoin Bill: A Watershed Moment for Crypto Regulation
Jerome Powell just handed stablecoins their golden ticket—regulatory legitimacy. The Fed chair's endorsement of the bipartisan bill signals a seismic shift in Washington's crypto stance.
Wall Street's already salivating over the profit potential. Because nothing accelerates adoption like politicians realizing they can tax it.
The fine print? Expect brutal compliance requirements that'll make DeFi purists shudder. But for institutional money? This is the on-ramp they've been waiting for.
Funny how quickly 'dangerous unregulated assets' become 'financial infrastructure' when banks want in on the action.
During Tuesday's congressional hearing, Federal Reserve Chair Jerome Powell expressed his support for crypto legislation, indicating that the United States would gain from the measures being considered.
Powell indicated that the bill was progressing, and voiced his acceptance of this move, emphasizing its importance in the present financial environment.
He said, "It’s a great thing that bills are moving. We need a stablecoin framework."
Legislators in the Senate approved the GENIUS Act last week; it will provide regulations for the issuance and trade of stablecoins.
With the bill's expected House passage this summer, it has the backing of both Republicans and Democrats and could be signed into law by President TRUMP this summer.
Legislators in the House are also currently considering a plan to regulate cryptocurrency markets called the CLARITY Act.
Chair Powell has given his blessing to a stablecoin framework.
Stablecoins are usually linked to the value of the US dollar, and the legislation seeks to clarify governmental monitoring of them and set standards for their reserves.
For the cryptocurrency industry, which has been navigating regulatory uncertainty, this is a step in the right direction towards establishing a more transparent framework.
Separately, Federal Reserve officials issued a statement saying the agency will no longer use "reputational risk" as an excuse to reject crypto-curious financial institutions.
The statements said that the Board has commenced a thorough evaluation of its oversight documents, including examination manuals, aiming to remove any references to reputation and reputational risk.
The officials said that in relevant instances, these references will be substituted with more focused analyses of financial risk.
According to the officials, the Board will work alongside other federal banking regulatory bodies to promote uniform procedures and will provide training for examiners to ensure that this reform is applied consistently across all banks under the Board's supervision.
The statement added that the adjustment will not alter the Board's expectation that financial institutions incorporate reputational risk into their risk management frameworks or the probability that those under the Board's supervision will implement robust risk management practices to ensure safety, soundness, and adherence to laws and regulations.
Republicans in Congress have been looking into "debanking" claims made during the Biden administration for months, trying to determine if specific people or organizations were barred from using banks because of their engagement in Bitcoin or some other cryptocurrency-related industry.
According to Powell, last year the Fed's awareness of debanking grew.
Traditional financial institutions have flocked to the cryptocurrency market since Trump's reelection, as policymakers move closer to establishing clear regulations.
Last month, crypto skeptic Jamie Dimon, CEO of JP Morgan, announced that customers can now buy Bitcoin, marking one indicator of the increasing transparency among banks.
Since stablecoins have the potential to become "a significant part of the payments universe" in the future, Powell argued in 2021 for more stringent regulations regarding them, comparing them to money market mutual funds and bank deposits.
Powell highlighted that Wall Street firms have recently shifted their perspective on technology, despite the US Central Bank monitoring advancements in the cryptocurrency sector for years, especially concerning central bank digital currency.
That shows a clear shift in tone and focus of the Fed chief in favor of the crypto sector.
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Blockcast
This week, host Takatoshi Shibayama explores the intersection of AI and blockchain technology with guests Abhinav Ramesh and Vinay Mohan, co-founders of Node Foundry. The conversation covers their backgrounds in crypto, current adoption challenges, and the potential of decentralized AI infrastructure to address rising compute costs.
Central to the discussion is Node Foundry's approach as "a two-sided marketplace" that simplifies access to decentralized AI solutions. The guests emphasize their goal to "abstract away the complexity of Web3" while maintaining privacy and security for enterprise users. As they highlight, the cost of compute is getting very expensive, but decentralized infrastructure can provide cheaper alternatives to traditional centralized models.
Blockcast is hosted by Head of APAC at Ledger, Takatoshi Shibayama. Previous episodes of Blockcast can be found here, with guests like Davide Menegaldo (Neon EVM), Jeremy Tan (Singapore parliament candidate), Alex Ryvkin (Rho), Hassan Ahmed (Coinbase), Sota Watanabe (Startale), Nic Young (Oh), Jacob Phillips (Lombard), Chris Yu (SignalPlus), Kathy Zhu (Mezo), Jess Zeng (Mantle), Samar Sen (Talos), Jason Choi (Tangent), Lasanka Perera (Independent Reserve), Mark Rydon (Aethir), Luca Prosperi (M^0), Charles Hoskinson (Cardano), and Yat Siu (Animoca Brands) on our recent shows.
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