Establishing a legal framework for stablecoins is a “good idea”

As digital assets gain mainstream adoption

US Federal Reserve Chair Jerome Powell said that establishing a legal framework for stablecoins was a “good idea” as digital assets were gaining mainstream adoption.

Speaking at the Economic Club of Chicago on April 16, Powell touched on the evolution of the cryptocurrency industry, which had delivered a consumer use case that “could have wide appeal” following a difficult “wave of failures and frauds.”

Powell delivers remarks at the Economic Club of Chicago. Source: Bloomberg Television

During crypto’s difficult years, which culminated in 2022 and 2023 with several high-profile business failures, the Fed “worked with Congress to try to get a [...] legal framework for stablecoins, which would have been a nice place to start. We were not successful,” said Powell.

“I think that the climate is changing and you’re moving into more mainstreaming of that whole sector, so Congress is again looking [...] at a legal framework for stablecoins, and depending on what’s in it, that’s a good idea. We need that. There isn’t one now.”

This isn’t the first time that Powell recognized the need for stablecoin legislation. In June 2023, the Fed boss told the House Financial Services Committee that stablecoins were “a form of money” that requires “robust” federal oversight.

Related: Stablecoins are the best way to ensure US dollar dominance — Web3 CEO

Support for stablecoin legislation is growing

The election of US President Donald Trump has ushered in a new era of pro-crypto appointments and policy shifts that could make America a digital asset superpower.

Washington’s formal embrace of cryptocurrency began earlier this year when Trump established the President’s Council of Advisers on Digital Assets, with Bo Hines as the executive director.

Hines told a digital asset summit in New York last month that a comprehensive stablecoin bill was a top priority for the current administration. After the Senate Banking Committee passed the GENIUS Act, a final stablecoin bill could arrive at the president’s desk “in the next two months,” said Hines.

Bo Hines (right) speaks of “imminent” stablecoin legislation at the Digital Asset Summit on March 18. Source: Cointelegraph

Stablecoins pegged to the US dollar are by far the most popular tokens used for remittances and cryptocurrency trading.

The combined value of all stablecoins is currently $227 billion, according to RWA.xyz. The dollar-pegged USDC (USDC) and USDt (USDT) account for more than 88% of the total market.