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Jerome Powell’s speech to the US Congressional Banking Committee was a determining factor in the growth of the cryptocurrency market on Tuesday. The head of the FRS, elected for another term, touched upon the most important aspects: attitudes towards stabilcoins and directions of future monetary policy.
The financial authorities of the United States are planning the emergence of a digital dollar, which scares investors with a possible ban on the circulation of any other tokens pegged to the exchange rate of the American currency.
The fears are rooted in the drive of the White House financial bloc to impose a banking license to issue Stablokins and take over fiat security funds under the control of the Treasury. Such requirements will force large issuers, in particular Tether, to abandon business, which can reduce the exchange turnover of cryptocurrencies by 75%, this is the share that now accounts for stabilcoins.
Jerome Powell rejected the possibility of such measures. “Stablecoins can coexist with the digital currencies of the Central Bank,” he told Congress in his speech. According to him, a report on the work done by the FRS specialists on the creation and launch of the CBDC will be published in the coming weeks.
The rise of cryptocurrencies at the end of the day provided Powell’s new remarks on the Fed’s monetary policy. The first statements on its tightening in November last year, followed by a transition from words to deeds, led to the formation of a downtrend that evaporated 40% of the capitalization of digital currencies.
The January lows were secured by the FRS Minutes, which led to forecasts of a discount rate hike in March. Powell admitted yesterday that the deadline could be shifted by another 2 months until May, which led to a sharp jump in demand for all risky assets.
To postpone the rate hike, according to the head of the Federal Reserve System, may weakening the dynamics of inflation. By the way, this indicator will be published today. If the rise in consumer prices reaches new heights, investors can arrange a sale of Bitcoin and altcoins.
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