Fed Chairman U.S. May Need Additional Crypto Regulation (1)

Governor: The United States may need additional cryptocurrency regulation – Mail Bonus

On Wednesday, July 14, the head of the Central Bank, Jerome Powell, said that the United States does not have a regulatory framework for cryptocurrencies, which he considers important if certain types of cryptocurrencies continue to grow in popularity.

The US government continues to lay the groundwork for the future management of cryptocurrencies.

Jerome Powell, the central bank’s governor, spoke about the central bank’s desire to manage stablecoins and the possibility of a central bank’s digital currency when he spoke to the US Federal Bureau of Financial Services (CBDC) in July.

Stablecoins, such as Tether and USD Coin, are a type of cryptocurrency that is pegged to fiat currencies such as the US dollar. Unlike digital assets like Bitcoin, where their value can change rapidly, this helps keep their value stable, making them better for digital payments. In a perfect world, these currencies would be backed by the currency reserve to which they are tied. However, there are no formal laws in place to ensure this happens now.

Powell likened them to money market funds and bank deposits that are highly regulated in the United States. He said: “Stablecoins do not have it.” “And if they’re going to be a big part of payments that we don’t think will be cryptocurrencies, but stablecoins could be, then we need a good legal framework that we don’t have right now.”

What does this mean for people who have Bitcoin and other cryptocurrencies?

Analysts said that people who want to invest in long-term cryptocurrencies should stick to well-known currencies such as Bitcoin and Ethereum. Most people should stick to the two most popular currencies unless they are more active traders who are willing to take risks by buying lesser known currencies.

Analysts say rules like the ones Powell wants to set are more likely to affect stablecoins and other smaller altcoins. Mike Uehlein, founder of WealthU Advisors and financial advisor, says that Bitcoin and stablecoins are used in different ways.

He says that if Bitcoin is “digital gold” then stablecoins, which have unlimited supply and are controlled by a few people, are more like money works now. Stablecoins are better for digital trading and transferring digital assets to and from “real” money than Bitcoin, which is a trade with potential value.

“Investors who buy Bitcoin as a value trade and buy stablecoins for a value trade are two different things,” says Tyrone Ross, CEO of Onramp Invest, a cryptocurrency platform for other financial advisors. Ross says a digital currency backed by the central bank is a threat to stablecoins, not Bitcoin.

However, each new rule could change the way your portfolio works

Even if stablecoin or CBDC laws do not directly affect Bitcoin, which is distributed and operated by people around the world, rules are likely to make the cryptocurrency market more risky. China’s latest attack on cryptocurrencies has already caused Bitcoin prices to fall by $ 30,000. We have also seen that currency prices tend to go in the same direction. For example, when Bitcoin prices fall, altcoins tend to do the same. Uehlein says regulation could kill some of the cryptocurrencies that exist now.

However, Powell’s proposed law is more likely to affect the value of stablecoins or smaller altcoins than Bitcoin. Ross says the government should pay attention to DeFi, stablecoins and more. “Do not place big bets in the space right now, and stay informed about recent developments and news.”

Why do we need rules for stablecoins?

Stablecoins could make it easier for traders to transfer money in exchange than if they had to transfer money from a bank account. This is because cryptocurrencies and prices are changing so fast. Swapping real money coins in and out of your bank account could take days and cost more than swapping coins for stablecoins.

Without rules, even coins can be dangerous.

Uehlein says: “Stablecoins are now being used instead of the US dollar, pegged 1: 1 to the dollar. Many investors and officials have questioned whether the connection is correct or not. Many investors would feel better if they knew the US Treasury would back their money. is where the potential digital currency issued by the US government comes in, where it would be supported by the government.What is the purpose of the Central Bank’s digital currency? Powell’s comments also showed that the Central Bank is still interested in the digital currency issued by the US Federal Reserve. It would be easier to do digital trading. Because it would (theoretically) run on a blockchain network, such trading would be secure and much faster than it is now. use the potential digital currency of the central bank to do just that. tablecoins like Tether or USDC. Fed officials and the analysts we spoke to all agreed that, at least in the United States, there was still a long way to go before the CBDC was fully established. Uehlein says he wants to see how CBDCs in other countries develop, but he also thinks it is “too early to say how serious the United States is about CBDC.” What will the next round of cryptocurrency regulation look like? All eyes are now on a report from the Central Bank that Powell hopes to publish in early September. “We will take care of digital payments in general,” he told the committee. “This is shown by things like stablecoins, cryptocurrencies and CBDC. We believe we have reached a key point in terms of having the right rules for all kinds of challenges and ways to pay. ”The Central Bank also intends to ask the public about the risks and benefits of cryptocurrencies, as well as the possibility of a. CBDC, and to talk to national groups like Congress. Powell says the aim of the study is to “identify the likely potential benefits and risks” of a digital currency issued by a central bank, as well as how regulators could weigh these costs and benefits.

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About Humano

He is a freelance writer based in Turkey. He loves NFT, football, movies and technology.

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