Powell: Congress needs to provide a 'viable legal framework' for U.S. digital assets, regulate stablecoins

Federal Reserve Chairman Jerome Powell said in testimony at a Senate Banking Committee hearing that the Federal Reserve and other U.S. bank regulators have repeatedly issued statements and policy explanations that amount to a stern warning to banks about cryptocurrencies, CoinDesk reported. In the latest warning, the regulator made it clear that banks that focus on the crypto space may not meet the safety and soundness standards that are the benchmarks for being able to continue operating in the United States. Powell suggested that Congress needs to step in to provide a "viable legal framework" for digital assets in the United States, and he also directly listed stablecoins as an area that needs regulation. While stablecoins have a place in finance if they are "properly regulated," Powell said there are real concerns about permissionless public blockchains because they are vulnerable to fraud and money laundering.