As Federal Reserve Chair Jerome Powell recently acknowledged, cryptocurrency is entering the mainstream. He thinks this momentum is driven in part by changing U.S. regulatory standards. Taken together, Powell’s comments represent a complete turnaround in the Federal Reserve’s position on cryptocurrencies.
Individually, Powell’s remarks help lend additional legitimacy of the sector to global policymakers. His remarks come at a time of growing economic instability, further lending credence to his view that digital assets are a way forward.
Powell praised pro-lively efforts from both chambers of Congress. In doing so, they are laying the groundwork for a legal framework for stablecoins, digital assets pegged to fiat currencies – such as the U.S. dollar. He underscored the necessity for clear regulatory guidelines:
"Depending on what’s in it, that’s a good idea. We need that. There isn’t one now." - Jerome Powell
Powell has previously said Bitcoin’s promise is as a potential digital alternative to gold. That’s a sign of his nuanced understanding of the ever-expanding crypto asset class.
In his press conference following the FOMC meeting, Powell acknowledged that economic activity has softened from this time last year. He warned that the U.S. is likely to see higher inflation and slower growth due to recently announced tariffs, which have exceeded market expectations.
Powell has been the Federal Reserve Chair since 2018. He has shown admirable dexterity in his economic policymaking through stormy seas, during the COVID-19 crisis and today’s inflation storm. His views on cryptocurrency are a big deal and an important step in the maturation process of the sector’s evolution.
Powell’s, and the Fed’s, signal on digital assets will strongly influence both investor sentiment and Congressional action in the months to come. His most recent remarks come as a number of candidates will likely be interviewed this fall to replace him.
