Fed Chair Backs Stablecoin Oversight, Warns on Tariff-Driven Inflation

As the cryptocurrency world steps closer to the
financial mainstream, U.S. Federal Reserve Chair Jerome Powell reignited calls
for a legal framework around stablecoins, digital tokens often pegged to the
dollar that are increasingly used in global transactions.

But while Powell sees regulation as a necessity, his
broader comments also raised new concerns over inflation and economic growth,
sending shockwaves through markets and halting Bitcoin’s latest rally.

Fed Reasserts Need for Stablecoin Oversight

Speaking at the Economic Club of Chicago, Powell noted
that stablecoins, despite the crypto sector’s past troubles, have emerged as a
digital product “that could actually have fairly wide appeal.”

His remarks followed years of hesitation in
Washington, with prior efforts to regulate stablecoins falling short. Now,
Powell believes momentum is shifting.

This isn’t Powell’s first signal of concern. In 2023,
he described stablecoins as “a form of money” and urged robust federal
oversight. As stablecoins gain ground in remittances and crypto trading,
lawmakers appear to be taking the issue more seriously. A stablecoin bill
recently cleared the Senate Banking Committee, and the current administration
has made digital asset policy a key focus.

The recent shift in tone aligns with broader
developments in Washington. Under President Trump’s leadership, the U.S. has
taken visible steps toward embracing crypto, including forming the President’s
Council of Advisers on Digital Assets.

Crypto Faces Pressure from Hawkish Fed Stance

While Powell advocated for clarity on digital assets,
he also struck a cautious tone on the economy. The Fed chair said recent market
volatility reflects investor anxiety over President Trump’s sweeping tariff
policies. Powell acknowledged that tariffs may push inflation
higher while slowing growth and employment.

The reaction across markets was swift. Analysts
interpreted Powell’s tone as firmly hawkish, signaling that interest rate cuts
were unlikely in the near term. While Powell suggested that crypto banking regulations
may ease somewhat, the broader macro backdrop suggests a tough road ahead for
digital assets.

Still, the renewed push for stablecoin legislation
signals that policymakers are beginning to treat parts of the crypto sector not
as speculative outliers but as financial instruments worthy of regulatory
structure.

This article was written by Jared Kirui at www.financemagnates.com.