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U.S. government has no intention to ban Bitcoin any time soon

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  • The Fed has been considering creating a central bank digital currency for some time, but policymakers are still hesitant.
  • Powell expressed reservations about the regulatory position of stablecoins and the central bank’s ongoing discussions about a digital dollar

Chairman of the Federal Reserve, Jerome Powell, feels that the federal government should regulate the cryptocurrency industry, but that a blanket ban on Bitcoin (BTC) and other digital assets is unlikely.

Powell reiterated that a China-style restriction on digital assets is not something he’s considering in answer to a query from Republican Representative Ted Budd of North Carolina.

Avoiding regulatory risks

Rep. Budd asked the question after Powell expressed reservations about the regulatory position of stablecoins and the central bank’s ongoing discussions about a digital dollar. A central bank digital currency, or CBDC, in Powell’s opinion, might perform many of the duties of stablecoins and cryptocurrencies while avoiding regulatory risk.

Stablecoins are similar to money market funds and bank deposits, but they are outside the regulatory perimeter to some extent, and it is appropriate that they be regulated, he said. Same activity, same regulation, says the narrator.

Fed Vs Policymakers

The Fed has been considering creating a central bank digital currency for some time, but policymakers are still hesitant. Meanwhile, the central bank has commissioned a number of study reports on the benefits and drawbacks of issuing a CBDC.

Powell is the chairman of the Federal Open Market Committee, which is in charge of determining US monetary policy. The Committee resolved earlier this month to keep its existing stimulus initiatives intact, but warned that the pandemic-induced bond purchase programme could be phased down soon. Risk assets, such as equities and cryptocurrencies, appear to have taken a hit as a result of the warning.

For many Bitcoiners, such congressional debates are exasperating to listen to because the Fed’s comprehension of the differences between Bitcoin and other cryptocurrencies is woefully inadequate.

However, given the Fed’s and members of Congress’ constant association of Bitcoin with other crypto currencies, it can be concluded Chairman Powell was speaking about Bitcoin as well.

From a regulatory standpoint, Bitcoiners and politicians still have a lot of work to do to appropriately represent and explain where their interests intersect, so that they can make an informed decision about whether and to what degree to regulate Bitcoin.

In any case, the United States’ regulation of Bitcoin is still an embracing of the technology, which is diametrically opposed to China’s policy from a geopolitical standpoint. America benefits from China’s loss.

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