US Lawmakers Urge Fed Chair Jerome Powell to Support Crypto Innovation

Several U.S. lawmakers have called on Federal Reserve Chairman Jerome Powell to support cryptocurrency innovation. “The Federal Reserve must work to support domestic innovation … Our government should never be in the business of thwarting innovation.”

Members of Congress Urge Fed Chair Powell to Support Crypto Innovation

Several U.S. Congress members have sent a letter to Fed Chair Jerome Powell asking him several questions regarding the Fed’s effort on cryptocurrency regulation. The bipartisan letter is signed by Reps. Tom Emmer, Darren Soto, Frank Lucas, Ted Budd, Ro Khanna, Glenn “GT” Thompson, and Eric Swalwell.

Rep. Emmer described:

Empowering individual Americans to become everyday investors should be our highest priority – decentralized digital assets provide that opportunity. The Federal Reserve must work to support domestic innovation … Our government should never be in the business of thwarting innovation.

The congressman explained that his letter “highlights concern with Powell’s statement that the biggest supporting argument for a Fed-issued digital currency is that it could eliminate the need for private sector innovation.”

The letter points out that cryptocurrencies are subject to “overlapping regulation from multiple regulators,” including the Fed, the Financial Crimes Enforcement Network (FinCEN), the Securities Exchange Commission (SEC), and the Commodities Futures Trading Commission (CFTC).

Noting that crypto adoption has been “hobbled by a lack of regulator clarity,” Powell was asked what steps the Fed is taking “to coordinate with other federal regulators on the development of policy guidance for digital assets such as cryptocurrencies, and other critical related policy issues such as custody and accounting, to ensure the United States remains a leader in financial innovation.”

In addition, the Fed chair was asked what steps the Fed is taking “on its own or in coordination with regional Federal Reserve Banks to provide regulatory clarity to banks that wish to offer cryptocurrency or other digital asset custody to their customers.”

Chairman Powell was further questioned when the Fed plans to release the discussion paper on the design of a U.S. central bank digital currency (CBDC) and whether he believes a CBDC would make cryptocurrencies and their applications — “from decentralized identity to decentralized file storage” — obsolete.

The lawmakers’ letter to Powell concludes with a request:

We appreciate your prompt response, no later than October 15, 2021, to the questions detailed in this letter.

Powell testified before the House Financial Services Committee in July, stating that “you wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital U.S. currency.” He recently admitted that he misspoke and the word cryptocurrencies should be omitted from the statement. He told Rep. Budd last week that he has no intention to ban or limit the use of cryptocurrencies.