Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee on Wednesday, addressing questions about cryptocurrency and stablecoins. He acknowledged that the crypto asset class appears to have staying power in the U.S. economy, and stated that the central bank considers payment stablecoins to be a form of money that warrants a strong federal regulatory role.
Powell on Crypto’s Staying Power
Congressman Warren Davidson (R-OH) noted that the crypto market currently has a market capitalization of approximately $1.1 trillion, and asked Powell: “Do you acknowledge that this asset class has staying power in the U.S. economy?” The Fed chairman replied: “It appears to have some staying power.” Powell then observed that a year ago the crypto market cap was significantly higher.
Rep. Davidson attributed the crypto market's volatility largely to a lack of legal clarity, and said the committee aims to change that through upcoming bills, including one focused on stablecoins. He also criticized the Securities and Exchange Commission (SEC) for its active enforcement in the crypto space, and noted that the proposed bills should provide clarity for SEC Chair Gary Gensler, Congress, and industry participants. Last week, Davidson and House Majority Whip Tom Emmer (R-MN) introduced the SEC Stabilization Act to restructure the SEC and remove Gensler as chair.
Powell Views Payment Stablecoins as a Form of Money
Rep. Maxine Waters (D-CA) questioned Powell about stablecoins. She explained that a bipartisan stablecoin bill would create 58 separate licenses, with federal regulatory approval required for only two of them. The remaining 56 licenses would be issued by states, territories, and D.C. with minimal federal oversight. Powell responded: “We do see payment stablecoins as a form of money… We believe that it would be appropriate to have quite a robust federal role in what happens in stablecoins going forward.” He stressed that leaving the federal government with a weak role and allowing extensive private money creation at the state level would be a mistake. “In all advanced economies, the ultimate source of credibility in money is the central bank,” Powell added.
Powell’s testimony signals a notable shift: the Fed acknowledges cryptocurrency’s longevity as an asset class while advocating for a unified federal regime for stablecoin regulation, rather than a fragmented state-by-state approach. This stance could accelerate legislative efforts in Congress to establish a comprehensive stablecoin framework.