Fed Chairman Jerome Powell made important statements about cryptocurrencies. Speaking at an event organized by France’s central bank, Banque de France, Powell stated that there are very important structural transparency issues around DeFi.
Fed Chairman talks about cryptocurrencies
“What is the role of central banks?” organized by the Bank of France on 27 September. The event, titled, discusses the tokenization of finance and the role of central banks in it. Fed Chairman Jerome Powell and World Bank President Christine Lagarde attended the event.
According to Powell, cryptocurrencies need real regulation
Fed chairman Powell made harsh warnings, especially for the DeFi ecosystem. He suggested that the process of financial normalization through rate hikes has exposed the flaws in DeFi. He also said that cryptocurrencies swelled during the pandemic when the Fed entered quantitative easing. Powell has this to say about DeFis in terms of financial stability:
The interaction between the DeFi ecosystem and the traditional banking system and the traditional financial system is not that great at this point. Thus, we have witnessed the DeFi winter without significant impacts on the banking system and broader financial stability.
Fed chief says DeFi winter reveals needs
Referring to the sharp price movements in the market, Powell said that these periods reveal the shortcomings:
(DeFi winter) That’s a good thing. I think it reveals weaknesses in the editing and the work that needs to be done carefully and thoughtfully. It gives us some time, but this situation won’t last forever.
Cryptocurrency regulations
The Fed chairman’s prominent statements were on the regulation of cryptocurrencies. Powell said the DeFi market needs more appropriate regulation:
Ultimately, this is not a stable balance and we need to be very careful about how crypto activities are handled within regulatory parameters. In any case, wherever they are, as DeFi expands and begins to touch more individual customers, there is a real need for more appropriate regulations to be in place.
Powell also spoke about the importance of the Central Bank Digital Currency (CBDC). European Central Bank President Christine Lagarde also believes that CBDCs will allow central banks to remain an anchor in the era of cryptocurrencies.
The idea of using CBDCs is highly controversial. Layah Heilpern, author of Undressing Bitcoin, calls it an unethical form of money. He believes that because CBDCs are programmable coins, they can be abused by central banks.
CBDCs are also a hot topic within the Federal Reserve. Neel Kashkari of the Minnesota Fed explained that he does not see any use cases for CBDCs in the US. Kashkari says CBDCs can be used as mass surveillance tools.
Reactions to Powell
Meanwhile, the crypto ecosystem is not happy with Jerome Powell’s comments. Powell commented that the central bank will always be the main source of trust behind money. The crypto ecosystem is not happy with these comments, as this idea is completely against Satoshi Nakamoto’s vision.
Contact us to be instantly informed about the last minute developments. twitter‘in, Facebookin and InstagramFollow and Telegram and YouTube join our channel!
Disclaimer: The articles and articles on Kriptokoin.com do not constitute investment advice. Cryptokoin.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is Kriptokoin.com an investment advisor. For this reason, Kriptokoin.com and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, assets or services in this article.
Warning: Citing the news content of Kriptokoin.com and quoting by giving a link is subject to the permission of Kriptokoin.com. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of Kriptokoin.com in violation of intellectual property law and relevant legislation.