Private stablecoins and CBDC can coexist, says FED chair Powell

Federal Reserve Chairman Jerome Powell recently answered several queries related to crypto-assets during a confirmation hearing for his second tenure as the central bank governor.

In response to a question posed by Senator Pat Toomey, a crypto proponent, who asked whether a CBDC could prevent the issuance of a “well regulated, privately issued stable coin”, Powell simply replied, “No, not at all.”

“You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies, if you had a digital US currency,” the Fed chief had said at a hearing in July. However, soon after Powell revised his statement at a September hearing and said that the central bank has no intentions to ban cryptocurrencies.

Meanwhile, Republican senator Cynthia Lummis, known for her advanced crypto policies, asked Powell about his decision over the establishment of SPDIs in Wyoming. SPDI, or Special Purpose Depository Institution, is a type of bank that would allow cryptocurrencies to be held in brick-and-mortar institutions.

Expressing her frustration during the meeting, Lummis asked Powell to throw her a “lifeline” on the proposed crypto banks. However, the chairman noted that the Federal Reserve is still scrutinizing the legislation as it might be “hugely precedential.”

Powell also reported progress on the Fed’s report on digital currencies, which was previously scheduled to be published in September last year.

“We didn’t get it to quite where we needed to get it. But it’s effectively there now, it’s within weeks [that] we will be publishing it.” the chairman said in response to Senator Mike Crapo’s query on the digital assets report.