As we know, China has recently not hesitated to (finally) move from threatening words to authoritarian actions. If crypto-currencies and their companies are banned from Chinese soil, this will clearly not be the case elsewhere in the world. At least that’s what the president of the U.S. Federal Reserve (Fed) just said.
Bitcoin and cryptocurrencies safe in the US?
The crypto-asset sector is not having a field day in China, since the country banned all forms of crypto-related services for its citizens. Between crypto exchanges, such as Huobi, in bad shape or Ethereum mining pools Sparkpool and Bepool forced to close their doors, the atmosphere is gloomy.
Yet, as Decrypt reports in particular, in this rather gloomy atmosphere, Jerome Powell, the Fed chairman, seems to want to ease some of the worries of the crypto sector. Speaking before the Financial Services Committee of the House of Representatives, the head of the U.S. Central Bank has thus clearly specified that the Fed has “no intention of banning them” and follow the example of China.
However, no ban on Bitcoin and cryptocurrencies does not mean that these assets will be exempt from a strict regulatory framework.
Stablecoins in the Fed’s sights
After the initial relief, which seems to be a minimum for a country claiming to be democratic (unlike China and its one party), however, comes the heavy burden of regulatory chains:
“(…) stablecoins are like money market funds. They are like bank deposits, but they are to some extent outside the regulatory perimeter. And it is appropriate that they are regulated. Same business, same regulation.”
If stablecoins are saddled with the same constraints as the aging and outdated banking system, it’s hard to see them remaining dynamic and innovative, which ultimately amounts to a kind of killing that’s as unappealing as the outright ban.
The challenge will be to ensure the security of stablecoin holders (with reserves backed by 100% liquid assets), without limiting the main qualities of stablecoins, notably the low cost of exchanges and their great speed (especially in comparison with traditional banks).
It should be noted that the Federal Reserve – like the People’s Bank of China – is working on its own central bank digital currency (MNBC). It is therefore understandable that these central bankers would want to restrict as much as possible the competition of private stablecoins, which are totally decentralized and out of reach of their monetary policies.
