Federal Reserve Chairman Jerome Powell has clarified his earlier statement about Central Bank Digital Currency (CBDC) replacing crypto. He confirmed that the US has no plans of banning cryptocurrencies.
On Thursday, the hearing on Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response, led by Chair of Federal Reserve, Jerome Powell, and Secretary of the Treasury, Janet Yellen, was held.
During the meet, several questions were asked about Digital Assets and Cryptocurrencies.
Federal Reserve on Digital Assets
The House Representative Ted Budd (Republican, from North Carolina) asked Powell about his stance on Stablecoins, CBDCs, and Cryptocurrencies.
Budd sought clarification of Mr Powell’s remarks on cryptocurrencies made during a July hearing that a U.S. Central Bank Digital Currency (CBDC) could replace Private Crypto and Stablecoins.
Jerome replied that he had “misspoken”.
The North Carolina representative then straightforwardly posed the question if he intended to “ban or limit the use of Cryptocurrencies,” similar to what China recently did.
Powell succinctly responded by saying, “No intention to ban them”.
Further, Powell was asked about his stance on Stablecoins, again by Budd.
Powell compared them to Money Market funds and Bank Deposits and should be regulated in a similar manner.
“They’re to some extent outside the regulatory perimeter, and it’s appropriate that they be regulated. Same activity, same regulation,” he remarked.
Lack of Regulatory Framework
Warren Davidson (Republican representative from Ohio) asked Secretary Yellen that there is a large “void” or unclarity regarding “what is a Digital Asset”, especially for tax reporting.
He also pointed out there is a lack of regulatory framework governing the different use cases of Digital Assets.
Yellen said that the Internal Revenue Service is going to “issued detailed regulations” about both matters.
Financial Privacy Concerns
Questions about financial privacy were also brought up.
Three Republican representatives, David Kustoff (from Tennessee), Trey Hollingsworth (from Indiana) and William Timmons (from South Carolina), were apprehensive about the IRS enacting new regulations requiring banks to report annual inflows and outflows from all bank accounts with at least $600 or at least $600 worth of transactions.
They all see it as a breach of privacy. The data can be misused.
Yellen explained that it is being done to address an estimated $7 trillion tax gap that needs to be reduced. She added that it will help check tax avoidance by individuals and businesses with “opaque sources of income.”
Market Sentiment Turned Positive
Post the news, BTC registered subsequent green candles on the 4-hour scale. At the time of publication, BTC is trading at 47620 USDT and has grown more than 10% in the past 24 hours.
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