As many as 7 lawmakers from the United States Congress have sent an open letter to the Federal Reserve Chairman, Jerome Powell, demanding to know how the American apex bank aims to support innovations bordering on digital currencies.
Spearheaded by Reps Tom Emmer, Ted Budd, Ro Khanna, Darren Soto, Frank Lucas, Glenn “GT” Thompson, and Eric Swalwell, clarity on earlier positions by the Fed Chairman on how the proposed US Digital Dollar will undermine the need for digital currencies were sought.
“On July 14, 2021, you appeared before the House Financial Services Committee and provided insight on the Federal Reserve’s work on developing a central bank digital currency (CBDC), your concerns about stablecoin regulation, and your view that a CBDC would undermine the need for decentralized digital assets,” the lawmakers wrote. “In light of these comments, we would like to know if and how you and the Federal Reserve Board of Governors intend to support domestic innovation and widespread adoption of decentralized digital assets.”
Based on the needed clarity, they put forth four crucial questions directed at Chair Jerome Powell to gain insight into the apex bank’s plans across multiple aspects of crypto innovation.
The Hard Questions?
The lawmakers demanded to understand the role the Federal Reserve is playing to coordinate with other lawmakers including but not limited to the US Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) in order to provide the much-needed policy guidance for the cryptocurrency industry.
Powell was also requested to provide insights into the form of guidance the Federal Reserve is providing to Federally Chartered banks who wish to provide cryptocurrency custody and other related services. This inquiry according to the lawmakers was prompted by the moves from Texas and Wyoming banking authorities who have laws backing financial institutions to provide Bitcoin custody services.
The Federal Reserve’s plans to introduce a discussion paper this summer on its Central Bank Digital Currency (CBDC) was also highlighted by the members of Congress, who wish to know the exact timing the paper will be published. Lastly, Chairman Powell was requested to clarify his contradictory stance on the need for private cryptocurrencies with the advent of a Digital Dollar.
Race to Maintain Leadership in Financial Innovation
According to the lawmakers, the primary reason for the questions put forth is to understand what the country’s apex monetary watchdog is doing to maintain leadership in financial innovations. From the increasing pressure to approve its first Bitcoin ETF product to the fast track of its CBDC development, aspects many nations are advancing in.