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The Federal Reserve is closely watching the crypto world—but isn’t worried, according to the central bank’s chairman.
Fed Chief Jerome Powell said today at a Senate committee meeting that the bank saw no “macroeconomic implications” from Bitcoin and the wider crypto market’s volatile price swings, but that better regulation still was required.
“I think the principle implication is really what we’ve been saying, and what others have been saying for some time, which is that in this [crypto] very innovative, new space, really there is a need for a better regulatory framework,” said Powell, after saying the central bank was closely watching it.
Bitcoin and most other coins and tokens in the ecosystem have suffered dramatic price drops the past month as many investors worried about the Fed hiking interest rates to control inflation have sold off riskier assets.
Bitcoin right now is trading for $20,162.59, according to CoinMarketCap. Last November, it went as high as $68,789.63. The crypto market selloff seems to be closely correlated with equities, and the U.S. stock market has had a horrible year.
Powell also was asked about stablecoins—digital assets pegged to fiat money like the U.S. dollar that are less volatile than Bitcoin and considered the backbone of the crypto market. He said the world of stablecoins was “new and emerging” and didn’t have the “fit-for-purpose” regulation that it needs.
U.S. authorities have been keeping their eyes on stablecoins for some time now, with the Biden Administration looking at ways to regulate them.