Digital financial assets require appropriate regulations to ensure a level playing field and protect consumers, Federal Reserve Chair Jerome Powell said on Tuesday.
“Within the decentralized finance ecosystem there are these very significant structural issues around the lack of transparency,” Powell said during a panel discussion on digital finance organized by Banque de France.
“We need to be very careful about how crypto activities are taken within the regulatory perimeter…there’s a real need for more appropriate regulation so that as decentralized finance expands and starts to touch more and more retail customers, appropriate regulation is in place…they need ‘same risk, same regulation’ wherever they take place.”
He added that while stablecoins, a crypto asset that attempts to peg its value to a conventional currency such as the U.S. dollar, are quite different from unbacked crytpo assets, they too require careful monitoring.
“If you’re going to have private money creation across the country, really there needs to be a federal role…we think it really should be the Fed that does play that role. That’s our principal focus right now,” Powell said.