WASHINGTON–While China has announced plans to ban cryptocurrency, Federal Reserve Chairman Jerome Powell says the U.S. will not be following suit.
During testimony before the House Financial Services Committee Powell was asked whether he had any intention to ban or limit the use of cryptocurrencies, similar to China.
Powell responded by saying the Fed has “no intention to ban them,” but did add that stablecoins, which are cryptocurrencies whose value is tied to government-issued currencies such as the dollar, “are like money-market funds, they’re like bank deposits, but they’re to some extent outside the regulatory perimeter and it’s appropriate that they be regulated.”
Ban in China
Questions were posed to Powell after China’s central bank announced it has made crypto illegal.
“Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China said, warning it “seriously endangers the safety of people’s assets.”
The price of Bitcoin fell by more than $2,000 (£1,460) in the wake of the Chinese announcement, but it rebounded after Powell issued his response.
It is the latest in China’s national crackdown on what it sees as a volatile, speculative investment at best – and a way to launder money at worst, Intelligent CIO reported.
“We shouldn’t read too much into the crypto ban in terms of its impact on cyber. The cyber and foreign policies of China or Russia include a wide assortment of tools,” stated Sam Curry, chief security officer of cybersecurity firm Cybereason. “China’s or Russia’s rules for how internal markets and external trade may or may not use cryptocurrency have little or nothing to do with how they conduct themselves in cyber, foreign policy or even government practices.
Reaching Beyond Borders
“While I don’t think the ban is part of a bigger Chinese plan to suppress global crypto exchanges, it’s not unusual for powerful states to reach beyond their borders to have an effect,” continued Curry. “However, the rest of the world is using crypto just fine. China may make it a black market or grey market item in its sphere of influence, but it will continue and adapt and evolve just fine. Can Bitcoin and its peers fall? Sure. But this alone won’t do it or even come close.”