“Crypto is a mess,” said Fed Chairman Jerome Powell

Jerome Powell, chairman of the US central bank (the Federal Reserve), warns banks in the United States against interfering in the crypto industry. According to Powell, the industry is currently a mess, but on the other hand, he also wants to prevent it from hindering innovation with strict rules and enforcement.

‘Crypto is a gang’

Powell spoke before the Senate Banking Committee on Tuesday, March 7, where he specifically discussed the central bank’s policy to fight inflation. However, after his speech, the chairman of the US central bank also received repeated questions about the crypto industry.

“We have to be open to the idea that there is technology – somewhere out there – that can drive productive innovation and improve people’s lives. We don’t want to stop that innovation.”

According to Powell. Still, he was especially critical of the sector: “We have seen a few remarkable events in the crypto world in the past year. There has been quite a bit of turmoil within that industry,” he refers to the collapse of FTX and the implosion of Terra (LUNA).

“We are seeing a lot of activity in the crypto space that regulated financial institutions need to watch out for,” Powell continues. So Powell is not really enthusiastic about bitcoin (BTC), but he does not deny that interesting things are happening.

Problems with stablecoins

If it were up to Powell, the US Congress should step up to provide the industry with clarity in the form of a “workable legal framework.” According to the chairman of the world’s most important central bank, the stablecoin industry in particular could use some extra rules and transparency.

With this, Powell probably refers directly to the implosion of Terra, in which the terraUSD (UST) stablecoin went down hard. Terra’s collapse wiped out more than $40 billion in capital and has awakened lawmakers around the world to the dangers of crypto.

In the end, it was Powell’s statements about the general health of the economy that moved the market the most. Inflation is proving to be much more stubborn than the central bank initially hoped and that will probably require tougher action from the Federal Reserve.