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Federal Reserve Chair Jerome Powell has voiced strong support for swift stablecoin regulation, urging Congress to pass legislation by the end of the year. His remarks during a recent congressional hearing underline the critical need for a regulatory framework to ensure the stability and security of transactions involving stablecoins in the United States.
Federal Reserve's Commitment: Powell emphasized the Federal Reserve's readiness to collaborate with Congress on crafting stablecoin regulations. He stressed the importance of a robust legal framework for stablecoins, highlighting the Federal Reserve's commitment to achieving this goal.
Lummis-Gillibrand Payment Stablecoin Act: Proposed by Senators Cynthia Lummis and Kirsten Gillibrand, this bipartisan bill aims to regulate payment stablecoins linked to the US dollar. The legislation seeks to protect consumers and encourage innovation without compromising the dollar's dominance.
Definition of Payment Stablecoins: According to the bill, a "payment stablecoin" is any crypto asset designed as a medium of exchange or payment means, redeemable for a fixed amount of US dollars or maintaining a stable value equivalent to the dollar. The bill does not cover stablecoins pegged to non-US currencies or other assets.
Support and Opposition: The proposed regulation has sparked mixed reactions. While some applaud the bill for providing clarity and consumer protection, others, including advocacy group Coin Center, criticize it. They argue that the ban on algorithmic stablecoins could hinder innovation and raise concerns about First Amendment rights.
Future Steps: The legislative process will involve multiple financial regulators and lawmakers working together to create a balanced regulatory environment that supports innovation while ensuring financial stability.
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