The chair of the U.S. Federal Reserve Board, Jerome Powell, said that payment stablecoins are a form of money and should be subject to federal regulation. He made this remark at a hearing of the House Financial Services Committee on June 21, where he discussed the Fed’s policy.

Powell was asked by the committee’s ranking member, Maxine Waters, about his opinion on a proposed bill that would create a new framework for stablecoin regulation in the U.S. The bill, which was introduced by Republicans, would allow states and other jurisdictions to issue licenses for stablecoin issuers, with only two of them requiring federal approval.

Powell said that he disagreed with this approach and that stablecoins should have a “robust” federal role in their oversight. He said that allowing a lot of private money creation at the state level would be a mistake. He also said that stablecoins are different from other cryptocurrencies, such as Bitcoin, which may be considered securities or commodities by other regulators.

The bill is the first attempt to legislate on crypto in the U.S. and has sparked debate among lawmakers and industry experts. Some argue that stablecoins pose risks to financial stability and consumer protection, while others claim that they offer innovation and efficiency in payments.

Stablecoins are digital tokens that are pegged to fiat currencies or other assets and aim to provide price stability and liquidity in the crypto market. They have grown in popularity and adoption in recent years, with some of them reaching billions of dollars in market capitalization.