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US Federal Reserve boosts cryptocurrency ahead of regulation
US Federal Reserve chair Jerome Powell made remarks this week suggesting that cryptocurrencies have long-term value as an asset class and that stablecoins can be considered a form of currency.
Powell’s comments, delivered to lawmakers in Washington, may not seem highly positive at first glance, but they carry significant weight within the crypto industry particularly with the industry’s history of facing legal challenges and regulatory scrutiny from the Securities and Exchange Commission (SEC) under Gary Gensler’s leadership.
Powell’s statements also indicate that the Federal Reserve is likely to take steps to regulate stablecoins. He emphasized the central bank’s role in providing credibility to money in advanced economies, expressing the belief that a robust federal role in overseeing stablecoins would be appropriate.
Powell revealed that the Federal Reserve is engaged in discussions with lawmakers regarding cryptocurrency legislation, with the possibility of introducing two bills in late July all the while acknowledging that the United States has a considerable journey ahead before establishing a central bank digital currency (CBDC).
Prior to Powell’s remarks, the markets were already experiencing an upswing due to the announcement of a new cryptocurrency exchange supported by Citadel Securities, Fidelity Digital Assets, and Charles Schwab Corp.
Additionally, BlackRock and WisdomTree filing for spot Bitcoin exchange-traded funds (ETFs) with the SEC further contributed to the positive sentiment.
As a result of Powell’s statement, the price of Bitcoin surged above $30,000 for the first time since April 2023, reflecting a nearly 20% increase since June 16.
These developments occurred amidst a significant outflow of Bitcoin from US markets. Data from Kaiko reveals that liquidity on Binance US, the US-based affiliate of Binance, plummeted by approximately 80% following the SEC’s ongoing legal action against Binance on June 5 for its alleged unauthorized operations in the country.
