Fed official calls blockchain overhyped

Blockchain is completely overhyped, and some research on CBDC resembles advertising clips. This was stated by Chris Waller, a member of the ФРС Board of Governors, during a virtual seminar on national digital currencies.

The official stressed that historically the Fed has played a secondary role in private markets. For a retail CBDC to launch, a market mechanism would have to fail, but Waller does not see one. The literature on digital currencies has focused more on their ‘bells and whistles’, distracting from the question of how necessary they are for citizens, he added.

Yale University professor Gary Gorton, who also participated in the event, countered Waller. He noted the emergence of stablecoins, which have become competitors to fiat, whereas previously each country had sovereignty in this matter.

“The Fed will face problems if ‘stablecoins’ become widely adopted. This is not an abstract matter; they are already affecting the money market.”, explained Gorton.

The professor noted that the Fed should actively master CBDC and devote more effort to this. Otherwise, stablecoins could displace digital currencies. Waller replied that the Fed is paying sufficient attention to studying and understanding this segment.

In March, Federal Reserve Chair Jerome Powell noted that ‘stablecoins’ pose risks to the U.S. financial system and require new laws to regulate them. 

In January the Fed released a report detailing CBDC research. It noted that the emergence of a dedicated digital form would allow the U.S. dollar to maintain its status as the world’s reserve currency.

On March 9, President Joe Biden signed an executive order coordinating federal agencies in regulating cryptocurrencies. The document required regulators to consider the opportunities, benefits, and risks of issuing a central bank digital currency.

Earlier, the U.S. Treasury released a report on the risks associated with stablecoins.

The department saw in stablecoins a threat to investors and market integrity, and also called for stringent regulatory restrictions. 

Earlier, Jerome Powell doubted the necessity of stablecoins and cryptocurrencies following the emergence of the digital version of the dollar.

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