The Federal Reserve Chairman Jerome Powell addressed the menace of Debanking in the crypto industry while pledging support for stablecoin regulation.
The Fed Chairman raised these issues at Tuesday’s Senate Banking Committee hearing while ruling out the idea of a digital dollar.
The monetary policy agency also confirmed that it is not in a rush to cut rates despite Trump’s pressure to lower U.S. borrowing costs. Chairman Powell argued that the economy remains strong, so there is no need to rush to adjust the policy stance.
The FED Chairman announced late last year that there will be only two rate cuts in 2025. Hence, the agency’s position is not surprising.
Addressing Debanking
The crypto industry has been plagued with hush cases of founders and companies getting Debanked by their traditional banking institutions. The menace flies under the radar, with various figures in the conventional finance world denying its existence despite growing evidence.
The Federal Reserve Chairman back in November 2024 dismissed the development, calling it a rumor peddled by podcasters.
In an interesting turn of events, the FED Chairman Jerome Powell finally admitted the Debanking menace at the Senate Bank Committee Hearing.
Jerome Powell stated that the Federal Reserve will adjust its policies to address the issue.
On Stablecoin Regulation
The Federal Reserve Chairman addressed the topic of stablecoin regulation during his speech at the Senate Bank Committee hearing.
Powell acknowledged that stablecoins offer potential benefits such as increased payment efficiency and financial inclusion but stressed that they also carry risks, particularly if they lack sufficient liquidity and capital safeguards.
He highlighted that stablecoins must be subject to enhanced oversight to prevent potential systemic risks. Powell called for clear guidelines to ensure that stablecoin issuers maintain adequate reserves and operate transparently.
American companies Paypal (PYUSD) and Ripple Labs (RLUSD) each launched their own stablecoins to compete with the industry’s leading issuers.
Tether (USDT) and Circle (USDC) remain the two biggest stablecoin issuers by market share and trading volume. However, Tether could be banned in Europe following a compliance dispute with Europe’s Market in Crypto Assets (MiCA).
