Powell believes the rapid advancement in fintech makes it imperative formulate separate laws for crypto assets.
It is known that the United States Federal Reserve Chairman Jerome Powell does not intend to ban crypto assets.
While speaking at the Bank for International Settlements Innovation Summit, on Wednesday, Powell pointed out that existing laws will not be able to cover digital assets, reported Seeking Alpha.
Not only that, the new technologies may require “new rules, laws, and frameworks” to deal with digital currencies, he said.
Digital currencies and stablecoins “will require changes in existing laws and regulations.”
Digital assets not governed by government regulation will probably be brought within a set of rules, at some point, he further opined.
“There’s no question that we’re in a period of rapid technological change, especially in payments,” he added. With the rapid innovation, “we don’t know how they’ll (digital products) will behave in time of market distress.”
Regulators also need to address the use of crypto in illicit transactions.
“It’s highly likely that digital financial activities that are currently outside the regulatory perimeter will find their way, will be brought within it, which is necessary to level the playing field, keep the trust of users, protect consumers and all that,” Reuters quoted him.
He also revealed that the Fed has not yet decided whether it will develop a CBDC. But the CBDC will:
- Ensure a user privacy;
- Be identity verifiable preventing money laundering and illicit activities;
- Be intermediated to lessen financial stability risks; and
- Serve as a widely accessible means of payment; it would have to be immediately transferable.
Ultimately, he believes that central banks’ role will evolve in the digital asset era. Back at home, the Indian Government has opted for a strict tax regime which could potentially stagnate the industry.
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