Fed Chair Powell Calls for Congressional Action on Crypto Amid Ukraine, Russia Conflict

Federal Reserve Chairman Jerome Powell today reiterated his view that there is a growing need for cryptocurrency regulations during a testimony before the House Financial Services Committee.

He said recent events in Ukraine have “underscored the need for Congressional action on digital finance, including cryptocurrencies.” 

“We have this burgeoning industry which has many parts to it, and there isn’t in place the kind of regulatory framework that needs to be there,” he said in response to questions about how Russia may be using crypto to circumvent sanctions.

Powell, crypto and regulation

But while Russia may be the focus at the moment, this isn't the first time that the Fed chair has addressed the issue of cryptocurrency regulations.

In July last year, Powell told Congress that stablecoins, cryptocurrency tokens that are pegged to fiat currencies such as the dollar, should be regulated “in comparable ways” to bank deposits and money market mutual funds. 

“Commercial paper are short-term overnight obligations from companies, and most of the time they’re investment grade, most of the time they’re very liquid, it’s all good. But during recent financial crises, the market just disappears,” he said. 

“That’s when people will want their money. It’s very simple: these are economic activities very similar to bank deposits and money market funds, and they need to be regulated in comparable ways.” 

What’s more, in January this year, Powell said the Fed would soon release a report on central bank digital currencies and crypto.

Elsewhere in the American regulatory sphere, chairman of the Securities and Exchanges Commission (SEC), Gary Gensler, has repeatedly raised the need for tougher crypto regulation. 

Last year, he warned that DeFi—shorthand for tools that enable non-custodial crypto trading without intermediaries—would “end poorly” without greater customer protection laws. He has also previously said the DeFi industry could be running rife with unregistered securities.