According to Jerome Powell, Chairman of the United States Federal Reserve, the crypto business has to develop regulations to prevent digital assets from being used to sponsor terrorism and other crimes.
Fed Chair Jerome Powell testifies before the House Financial Services Committee that the crypto sector, like other significant emergent digital markets in the past, need a regulatory framework in place to prevent the funding of illegal activity.
He believes that there is a need for Congressional action on digital money, including cryptocurrency. He feels that this is a booming sector with numerous moving elements, and that the necessary regulatory framework is not in place.
Jerome Powell said:
It’s probably no different with railroads, or telephones, or the internet and ultimately what’s needed is a framework and in particular, ways to prevent these unbacked cryptocurrencies from servicing as a vehicle for terrorist finance and just general criminal behavior, tax avoidance, and the like.”
Powell then discusses whether the United States intends to issue a central bank digital currency (CBDC), stating that just releasing one would not solve the challenges connected with criminals exploiting virtual assets to escape the law.
“It depends on why people are using digital currencies. If they’re using them to evade visibility and evade the law, then for us, just to have a law-abiding CBDC won’t change that. They’ll still be able to use those currencies for that matter.”
He believes that present unbacked digital currencies are only vehicles for speculation. They aren’t utilized in transactions. They do not act as a store of value. They are speculative, much like gold. That’s what they’re utilized for, but a CBDC in the United States would have a broader perspective.
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