Fed Chairman Confirms They Won’t Ban Crypto, Calls the Need for Regulations

In a House Financial Services Committee meeting on 30 Sep Thursday, U.S. Federal Reserve Chairman Jerome Powell told Congress that the central bank has zero plans to forbid cryptocurrencies. Also stated that stablecoins need to be regulated, as they are similar to money market funds. The comment was in reply to an inquiry from House Representative Ted Budd of North Carolina.

Ted Budd, an old-time advocate of crypto and a well-versed member of the Congressional Blockchain, asked, "As a matter of policy, is it your intention to ban or limit the use of cryptocurrencies like we're seeing in China?" For which the Fed Chairman replied, "[I have] no intention to ban them."

Powell's comments developed just two days after asking Congress for consultation and legislative support to develop the digital dollar. Few in the crypto ecosystem have hypothesized that establishing a U.S. central bank digital currency (CBDC) would lead to prohibitions on private crypto, as was recently seen in China.

 When asked about stablecoins, Powell compared them to money market funds or bank deposits. "Stablecoins are like money market funds, are like bank deposits, but they're to some extent outside the regulatory perimeter and it's appropriate that they be regulated. Same activity, same regulation,” he said.

As the ongoing studies for the potential use cases of a CBDC similar to cryptocurrencies, the Fed may suffer severe debates as they figure out whether to move forward with a digital version of the dollar. Some skeptical policymakers believe a CBDC is not required.

This decision from the Federal Reserve comes just at a time when China has been cracking down on the crypto market. Last week, China’s central bank - PBoC - introduced a new law, making all crypto-related transactions illegal in the country.

The Fed’s comment comes just a day after Elon Musk said that it will be impossible for the government to destroy crypto. “It is not possible to, I think, destroy crypto, but it is possible for governments to slow down its advancement,” he said.

Just after the Fed’s comments, bitcoin has pounced back once agin today. As of press time, Bitcoin (BTC) is trading 8% up at a price of $47,236 and a market cap of 4889 billion.

This comes as the overall crypto space bounces back once agin moving past $2.0 trillion. Bitcoin and almost all of the top ten altcoins  have gained anywhere between 5-10% as of press time.