The Chairman of the U.S. Federal Reserve says that the crypto industry needs to form regulations to thwart digital assets from being used to finance terrorism and other crimes.
In a testimony before the House Financial Services Committee, Fed Chair Jerome Powell says that the crypto industry, much like other prominent emerging tech markets of the past, needs a regulatory framework in place to prevent the funding of illicit activities.
“I just think [there’s] the need for Congressional action on digital finance, including cryptocurrencies. We have this burgeoning industry which has many parts to it, and there isn’t in place the kind of regulatory framework that needs to be.
It’s probably no different with railroads, or telephones, or the internet and ultimately what’s needed is a framework and in particular, ways to prevent these unbacked cryptocurrencies from servicing as a vehicle for terrorist finance and just general criminal behavior, tax avoidance, and the like.”
Powell then comments on whether or not the United States plans on issuing a central bank digital currency (CBDC), saying that simply issuing one wouldn’t necessarily solve the problems associated with criminals using virtual assets to evade the law.
“It depends on why people are using digital currencies. If they’re using them to evade visibility and evade the law, then for us, just to have a law-abiding CBDC won’t change that. They’ll still be able to use those currencies for that matter.
The existing digital currencies that are not backed are really vehicles for speculation. They’re not used in payments. They’re not a store of value. They’re speculation like gold. That’s what they’re used for, whereas a US CBDC would have a wider view.”