During today’s renomination testimony in front of the Senate Banking Committee, Jay Powell, the re-elected chair of the Federal Reserve, said that the crypto report is ready, and will be published in the coming weeks.
At his semi-annual monetary report hearing, Jay Powell was asked by Senator Mike Crapo as to the status of the crypto report. Powell replied that “the report is ready to go”. He added, “I expect we will drop it in coming weeks”, but he did add that “I hate to say this”, referring to the time frame, and given that the report had been delayed previously.
The report is expected to focus on central bank digital currencies (CBDCs), which are the central bank version of cryptocurrencies. But it is also expected that other areas in the crypto industry will also be discussed.
Having witnessed the advanced stage that the Chinese digital yuan has reached thus far, the Fed will likely be keen to get its own CBDC out and into trials quickly, although up to now the US appears to have chosen to sit back and watch other countries do the front running so far.
One topic that will likely be in the report is that of stablecoins. The Fed chair has already made his view known that they should be far more heavily regulated.
Stablecoins are extensively used in the crypto industry as trading pairs for many cryptocurrencies, and are usually pegged to fiat currencies such as the dollar, thereby avoiding a lot of the volatility associated with such a young and still comparatively illiquid market.
Tether is the most prominent of the stablecoins in the industry, and many question the backing behind it. It is believed that much of what backs the USDT stablecoin is commercial paper. Tether denied back in September that it had exposure to Evergrande through its commercial paper holdings.
In a previous declaration on stablecoins Powell said:
“We have a tradition in this country where the public’s money is held in what is supposed to be a very safe asset,” he said, before explaining that the regulatory framework for deposits and money market funds “doesn’t exist, really, for stablecoins.”
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