The Federal Reserve Chairman Powell: Calls for the establishment of a stablecoin regulatory framework to support cooperation between the banking industry and the digital asset industry

Recently, The Federal Reserve (FED) Chairman Jerome Powell reiterated the necessity of establishing a regulatory framework for stablecoin in his speech at the Chicago Economic Club, and stated that the FED does not intend to restrict the interaction between the banking sector and the digital asset industry.

Powell pointed out that both chambers of the U.S. Congress are working again to legislate a framework for stablecoins. He believes that given the growing importance of these digital tools, establishing a regulatory framework has become particularly necessary. Although previous cooperation between the Federal Reserve and Congress on the legal framework for stablecoins was unsuccessful, Powell noted that “the situation is changing,” and lawmakers are now showing new interest in formally establishing regulatory provisions.

He emphasized that such a framework should include consumer protection measures and ensure transparency. Powell added: “Stablecoins are a digital product that may actually have quite broad appeal.”

Regarding the Federal Reserve’s stance on banking activities related to digital assets, Powell acknowledged that U.S. banking regulators, including the Federal Reserve, have taken a conservative approach in issuing guidance on how banks should manage their exposure to digital assets. However, he stated that some of this guidance may be relaxed to accommodate responsible innovation, as long as consumer protection and financial safety can be ensured.

Powell stated: “We will try to make adjustments in a way that maintains the safety and robustness of the financial system.” These remarks further elaborated on his previous statement that the The Federal Reserve (FED) has no intention of preventing banks from serving legitimate digital asset clients.

Earlier this year, Powell clearly stated in his testimony to Congress that under the established regulatory framework, digital asset activities have been conducted within banks regulated by the Federal Reserve (FED). He used digital asset custody as an example, explaining that if banks and regulators understand the scope of these activities, they can safely provide such services.

Powell also acknowledged that integrating digital assets into traditional financial regulation is quite complex and called for a more comprehensive regulatory framework. In the press conference following the February Federal Open Market Committee (FOMC) meeting, Powell stated that although the barriers for banks to participate in digital asset businesses remain high, the Federal Reserve does not intend to cut off banking services for legally operating digital asset companies.

Discussions around stablecoin legislation are ongoing, and meanwhile, the use of stablecoins in payment and digital settlement continues to grow. Last year, the transfer amount of stablecoins approached $14 trillion, surpassing Visa. Powell’s statement indicates that the Federal Reserve (FED) supports Congress’s efforts to establish formal rules for stablecoins, provided that such legislation can strike a balance between innovation and risk control.

Currently, there is no federal regulatory framework specifically for stablecoins, but recent Congress sessions have introduced several legislative proposals. Among them, the most notable are the “GENIUS Act” and the “STABLE Act” proposed by the House of Representatives and the Senate, respectively.

The latest stance of the Federal Reserve indicates that as stablecoins increasingly integrate into the global financial market, U.S. financial authorities are becoming more willing to engage in the formulation of digital asset policies.