Fed Chair Powell Says Crypto Have “Staying Power as an Asset Class”

Federal Reserve chair Jerome Powell has acknowledged cryptocurrency’s longevity and enduring nature as an asset class. Testifying before the House Financial Services Committee on Wednesday, Powell asserted that “crypto appears to have staying power as an asset class.” 

Although the Fed chair appeared before the Committee in a semi-annual hearing on monetary policy to initially discuss the recent halt on interest rate hikes, the discussion quickly shifted to digital assets.

Powell Labels Stablecoins a Form of Money

During the hearing, Powell also discussed stablecoins. According to the Fed chair, payment stablecoins are a form of money. While acknowledging this, he emphasized that the central bank should play a role in approving their issuance in the United States.

“We do see payment stablecoins as a form of money, and in all advanced economies, the ultimate source of credibility in money is the central bank. We believe it would be appropriate to have quite a robust federal role,” Powell said.

Moreover, he stated that the Fed has staff members actively engaging in discussions regarding the regulation of digital assets.

Powell: CBDCs Not Likely Anytime Soon

Powell also made comments on Central Bank Digital Currencies (CBDCs). He noted that the central bank is far from deciding whether to issue a digital dollar, but if that happens, it will be issued in a way to maintain financial privacy and not replace the current financial system.

“If we were to support, at some point in the future, a CBDC, it would be one that would be intermediated through the banking system and not directly at the Fed,” he added.

Meanwhile, Powell’s positive remarks on crypto come as the market has continued to rally despite economic uncertainty and a regulatory crackdown on crypto firms. On Wednesday, Bitcoin (BTC) jumped 8% to cross the $30,000 mark for the first time since mid-April. Ethereum (ETH), on the other hand, gained 5% to trade at $1,877, reaching its highest level since June 2022.