The Fed has not yet decided on advancing CBDC in the United States. Powell said this at a conference on the role of central banks in the markets for digital assets.
“We will not make a positive decision for some time,” he said.
Powell said the Fed, in cooperation with Congress and the executive branch, would focus on policy assessment and technical issues.
The central bank head sketched a multi-year period during which the Fed will focus on “bolstering public trust in the analysis conducted and the final conclusions yet to be developed.”
Citing the report on the digital dollar, Powell stressed that if a CBDC is adopted, it would have several key characteristics:
- the participation of intermediaries;
- privacy protections;
- identity verification;
- compatibility.
In his remarks, the Fed chief also noted that the current downturn in the cryptocurrency market has given regulators more time to identify and address weaknesses in the supervision of the industry.
He said a bright spot is the low penetration of traditional finance and banking systems into DeFi.
He pointed to “significant” structural problems and a lack of transparency in decentralized finance. In particular, there is a need to regulate “non-custodial wallets and algorithms,” he added.
Powell also stressed the need for “proper oversight” of stablecoins.
As reported, on September 16 the White House unveiled a regulatory framework for the crypto industry. It envisages a range of initiatives, including tougher enforcement against providers of services tied to digital assets.
Bloomberg later reported that a bill regulating “stablecoins” is in the works. In particular, it would impose a two-year ban on new algorithmic stablecoins such as TerraUSD.
Coinbase chief executive Brian Armstrong said that the hardline U.S. approach to crypto industry oversight is hampering its development.
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