Fed Chairman Jerome Powell has said that cryptocurrencies and stablecoins in particular pose risks to the US financial system and require the development of new laws to regulate them, Associated Press reports. He has said:
“Stablecoins, CBDCs and digital finance in general will require changes to existing laws and regulations or the development of entirely new rules. There are potential financial stability issues for some products. We do not know how they will behave during the stress in the market.”
According to him, the rules should follow the principle of “the same activity, the same regulation.” This means transactions outside the traditional banking system should be regulated in the same way as those performed by financial institutions.
Powell believes that cryptocurrencies have been used for money laundering and other illegal activities. He has added that governments must prevent this in order for digital assets to become widespread.
