Fed's Jerome Powell says 'stablecoins are a type of private money'

Per American Banker

It's long been debated as to whether stablecoins should be considered money under the government, and now, the Federal Reserve's Jerome Powell finally clarified what they thought about stablecoins. Fed Chair Powell said that they were a type of private money.

Powell: "The central bank is and will always be the main source of trust behind money. Stablecoins essentially borrow that trust from the underlying issuer, and in many cases, these are dollar stablecoins, so they're really borrowing that trust"

This came as the Chair was discussing regulating digital assets at a panel hosted by the Banque de France. Powell explained the relation of stablecoins to fiat currencies, especially the dollar.

Powell: "These are private forms of money. They will be subjected to runs if their reserves are not full of very high-quality assets, so there's a regulatory job to be done there."

It's imoprtant to note that there was a stablecoin that crashed in 2022, the TerraUSD, which should've been pegged to the dollar but was backed by another cryptocurency, LUNA,  to maintain the same value as the fiat currency instead.

In December, Coinbase also urged against using USDT and asked users to shift to USDC by waiving conversion fees.

See flow at unusualwhales.com/flow.

Other News:

• The SEC has charged Terraform, $LUNA / $UST, and CEO Do Kwon with defrauding investors
• Coinbase Encourages Users to Abandon USDT for USDC, Saying the conversion Fees Will be Waived

Resources:

American Banker