The Chairman of the Federal Reserve said that he supported responsible innovation in the field of crypto assets.
Jerome Powell, chairman of the Federal Reserve, talked about the supervision of decentralized finance at the digital finance panel discussion hosted by Banque of France on Tuesday.
Federal Reserve Chairman Jerome Powell elaborated his views on various sectors of the encryption industry, including stable currency, central bank digital currency (CBDC) and decentralized finance (DeFi).
Powell said that DeFi has "significant structural problems" that can be solved through appropriate regulations.
"In the DeFi ecosystem, there are these very important structural problems around the lack of transparency.
I think the good news is that, from the perspective of financial stability, the interaction between DeFi ecosystem and traditional banking system and traditional financial system is not so big at present. Therefore, we witnessed the winter of DeFi, which has no significant impact on the banking system and the wider financial stability, which is a good thing.
"That's a good thing," he shouted. "I think this shows the weakness of the supervision and the work that needs to be seriously considered, and gives us a little time."
However, the Chairman of the Federal Reserve warned that the situation he had just described "will not continue indefinitely". He clarified that "in the end, this is not a stable balance, and we need to be very careful... how encryption activities are carried out within the scope of supervision", and elaborated:
In any case... more appropriate supervision is really needed, so that with the expansion of defi and the start of contacting more and more retail customers, appropriate supervision is in place.
Powell went on to say that the Federal Reserve has a history of cooperation with the private sector to promote "responsible innovation" and bring consumers higher efficiency and lower costs.
"We do support responsible innovation, including encryption related services or products. I recall the era when cheques were outdated in many ways, and we are in the process of promoting this transformation. The Federal Reserve is about a year away from launching FedNow, a real-time payment system that will provide real-time payments to the public through its banks
Of course, the whole purpose of regulation is to create a fair competition environment, so that we can benefit from real innovation, and avoid the trap of circumventing regulation. "
Powell then looked forward to a stable currency, saying that as stable currency issuers focus on mainstreaming crypto assets linked to the US dollar, an appropriate regulatory structure needs to be established.
"Especially on the stablecoin, most of the stablecoins are now used on the encryption platform. In fact, stablecoins are currency like assets used to settle transactions on the DeFi platform. However, many stablecoin issuers are talking about it. In order to reach the public more widely, including retail payment, potential stablecoin issuers have a great interest in nts all over the world.
From a regulatory perspective, this is indeed our main concern. Should stablecoin be used like this? More extensive, more public oriented, away from the encryption platform? What is the appropriate regulatory structure?
We have a group of American regulators under the leadership of the Treasury Department to analyze and make recommendations, and we encourage Congress
Christine Lagarde, President of the European Central Bank, and Agust í n Carstens, General Manager of the Bank for International Settlements (BIS) also participated in the discussion. Both of them agreed with Powell and emphasized the importance of properly regulating the defi ecosystem.
