For Jerome Powell, the cryptocurrency winter is helping regulators as they have extra time to address the issue. The reason for this is the drop in investor interest while the market has been in a sharp decline for almost a year.
On the occasion, Powell spoke directly about stablecoins and the DeFi sector. His speeches took place during a conference organized by the Central Bank of France this Tuesday (27). In it, other important figures such as Christine Lagarde, president of the European Central Bank, were also present.
Currently, many attribute the fall in markets – both crypto and shareholders – to the Fed’s own monetary policy. . After all, the increase in the basic interest rate to control American inflation is scaring investors away.
Jerome Powell talks about regulation of cryptocurrencies
As the US and other countries raced to enact cryptocurrency laws as they drew public attention, a sharp drop in markets appears to have slowed down such adoption, giving regulators more time to work on the matter.
At a conference held in Paris on CBDCs and digital currencies, Jerome Powell, chairman of the Fed, took the opportunity to speak on the subject.
“In the DeFi ecosystem, there are these very significant structural issues around transparency, lack of transparency. The good news is that the interaction between the DeFi ecosystem and the traditional financial system is not so great now.”
“We were able to witness the DeFi winter, but it didn’t have any significant effects on the banking system, on the broader financial stability, and that’s a good thing and I think it demonstrates the weaknesses and the work that needs to be done in around regulation, carefully”, declared Jerome Powell.
“Finally, this is not a stable balance, we need to be very careful about how cryptocurrency activities are carried out within the regulatory perimeter”, concludes the Fed chairman. “In any case, wherever they belong, there is a real need for more adequate regulation as DeFi expands and starts reaching more retail customers, there must be regulation in force.”
“ give us a little time. This situation will not persist indefinitely.”
Regarding cryptocurrencies being a risk to financial stability, this point had already been pointed out as a risk by others bodies, such as the IMF, during the bull run of 2021.
Anyway, the speech of the President of the US Central Bank looks like a warning that another cryptocurrency boom will come in the future and, when it arrives, broader laws should already be in place.