US Federal Reserve Chair Jerome Powell Backs Crypto Before Congress
Summary: Jerome Powell, the US Federal Reserve chairman, recently expressed his bullish assessment of the cryptocurrency industry before the Congress, stating that cryptocurrencies can sustain as an asset class in the US. Davidson believes the committee will help provide regulatory clarity to SEC Chair Gary Gensler and other market players.
Jerome Powell, chairman of the US Federal Reserve, recently made news with his bullish assessment of the cryptocurrency industry. Powell said before Congress that he thinks cryptocurrencies can sustain as an asset class in the United States.
Powell made this comment as part of his testimony before the House Committee on Financial Services about the Federal Reserve’s Semiannual Monetary Policy Report.
Rep. Warren Davidson (R-Ohio) raised questions about crypto’s sustainability in the US economy throughout the session. Davidson said that the total market value of all cryptocurrencies is close to $1.1 trillion, and he questioned Jerome Powell whether or not he believed in the cryptocurrency’s long-term sustainability.
In response, Powell said cryptocurrencies seem to have staying power, but he also pointed out that their market valuation has fallen over the last year.
Notably, ‘staying power’ is defined by Nasdaq as an investor’s capacity to maintain exposure to a market notwithstanding a decline in the value of their holdings. If Powell thinks crypto has some staying power, that means he thinks it will be valuable and useful in the future.
Declining Market Cap
The total market value of cryptocurrencies was severely impacted when the FTX cryptocurrency exchange failed in November. Following FTX’s demise, it was reported that the overall market cap fell below $1 trillion. Concerns were voiced regarding the stability and governance of cryptocurrency exchanges after the event, which shook the sector to its core.
During the hearing, Representative Davidson also brought up the subject of cryptocurrency volatility, attributing it in large part to the ambiguity of the law as it now stands. In recent months, authorities have upped their scrutiny and pressure on the cryptocurrency business.
Nonetheless, Davidson has expressed confidence that the committee would aid in giving SEC Chair Gary Gensler and other market players with the essential regulatory clarity.
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Davidson suggested two laws under discussion as possible solutions to these problems; one would regulate stablecoins, while the other would regulate the structure of the digital asset market.