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- US economic leaders gathered in DC Tuesday to discuss the future of crypto policy and innovation in America.
Financial leaders in the United States are taking a close look at cryptocurrency, both from a regulatory and inventive standpoint.
The Federal Reserve should increase its oversight of the stablecoin ecosystem, and the Office of the Comptroller of the Currency, which oversees the American banking system, could benefit from increased tokenization, according to officials speaking at the DC Fintech Week event in Washington on Tuesday.
“It’s really important for us to learn about new technology all the time,” said Michael Barr, the Fed’s Vice Chair for supervision. “There’s obviously a lot of innovation happening in the private sector around stablecoins and we want to make sure we can harness that innovation to improve efficiencies if we can in the payment system.”
During a separate panel, Michael Hsu, acting US Comptroller of the Currency, agreed and claimed that blockchain technology might be a game changer in the settlement arena.
“Tokenization is focused on solving an actual problem, and that problem is settlement,” Hsu said
Hsu, on the other hand, believes the crypto business as a whole is still “replete with frauds, scams, and hacks.”
Barr said that extensive central bank regulation is required, particularly in the stablecoin arena, to preserve the financial system.
“If a private sector entity is creating a stablecoin that is connected to a fiat currency, in the case that we care about [it would be] the United States Dollar, they’re creating a form of private money, and private money needs to be well regulated,” Barr said.
Barr’s comments on Tuesday were not his first about stablecoins and central bank digital currency.
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“When that asset is also used as a means of payment and a store of value, it borrows the trust of the central bank,” Barr said in a speech last month. “The Federal Reserve has a strong interest in ensuring that any stablecoin offerings operate within an appropriate federal prudential oversight framework, so they do not threaten financial stability or payments system integrity.”
In terms of government policy, politicians on both sides of the aisle look eager to bring stablecoin legislation to President Joe Biden’s desk.
The House Financial Services Committee adopted the Clarity for Payment Stablecoins Act earlier this year, which offers state regulators more power in licensing issuers.
CBDCs, on the other hand, have become a more divisive subject.
In September, Rep. Tom Emmer, R-Minn., sponsored the Central Bank Digital Currency Anti-Surveillance State Act, which would prohibit the Fed from releasing a retail CBDC. Rep. Maxine Waters, D-CA, pounced on the wording, claiming that Emmer and other Republicans are preventing the US dollar from remaining a global reserve currency and stifling innovation.
However, the renewed dash to avoid a government shutdown this month implies that any change on crypto-related policies is unlikely.
Barr stated on Tuesday that the Fed’s CBDC investigations are still in a solely research phase.
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