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digital daily: Acceptance Accelerates Adoption

Macro Mondays – Acceptance Accelerates Adoption: "Crypto appears to have staying power as an asset class." Fed Chair Powell offered unusually direct remarks when questioned about cryptocurrencies in his brief semi-annual Monetary Policy Report to Congress. And he didn’t stop there. “We, [the Fed], do see payment stablecoins as a form of money, and in all advanced economies, the ultimate source of credibility in money is the central bank,” Powell elaborated. This is the Fed’s position – crypto requires a “robust federal role” in the oversight of stablecoin. Powell understands that McHenry, the Chair of House Financial Services, who he was addressing, is readying a stablecoin bill for a vote. Powell argued the bill, in its current form, would leave the Fed “severely hamstrung” by not securing oversight of nonbank stablecoin issuers. That the conversation is happening is almost as interesting as its content. There’s movement. And the broader message is clear – blockchain technologies are integrating into the mainstream. The US pathway may run through traditional institutions and private blockchains. That’s slow. Other regions are racing ahead with institutional integration on public blockchains – faster acceptance leads to faster adoption. Powell’s message is that stablecoin issuers belong in the Federal banking system. Implicitly, he’s saying more – those are also traditional banks, existing players. We may see the same in exchange traded funds with Blackrock the first to resolve the “surveillance challenge” that led the SEC to reject prior applicants. Either way, acceptance accelerates adoption. It’s a different pathway than early crypto advocates imagined or desired. But it’s a pathway.