The United States government, through the Federal Reserve, has stated that Cryptocurrency has enormous potential for innovation despite its vulnerability.
The Fed chairman, Jerome Powell added that the US government will not want to “Strangle” the innovation.
According to the Federal Reserve Chairman who appeared for a testimony hearing before the Senate Banking Committee yesterday, cryptocurrency is embedded with useful technology which can accelerate innovation and make life better.
“We have to be open to the idea that – somewhere in there – there is a technology that can be featured in productive innovation that makes people’s lives better,” Powell told members of the committee. We don’t want to stifle innovation,” he added.
Investors King understands that the crypto community has been on the edge before Powell’s appearance, hoping he would not give a negative statement about cryptocurrency.
Mr Powell however noted that banks should take caution about getting involved in digital assets. A warning he has constantly dished out on several occasions. He added that recent events including the FTX fallout are strong examples that the industry is associated with huge risks.
Similarly, the Silvergate bank issue offers a real-time example of the dangers of crypto concentration in banking, as most of its crypto customers including Coinbase have withdrawn their deposits.
“We’ve seen just a remarkable set of events in the crypto space. quite a lot of turmoil (in the past year) We see in crypto activity lots of things that suggest that regulated financial institutions should be quite cautious in doing things in the crypto space,” he said.
Powell nonetheless suggested that Congress needs to step in to provide a “workable legal framework” for digital assets in the U.S. He also pointed out that stablecoins need some attention owing to their being pegged with the dollar.
Recall a widely used stablecoin, BUSD was being classified as securities by US regulators, accusing the produce Paxos of breaching corporate law.