Federal Reserve Chair Jerome Powell Confirms No US CBDC Plans Until 2026
The Federal Reserve Chair Jerome Powell testified before the Senate Banking Committee on February 11, confirming that the Fed would not establish a central bank digital currency (CBDC) during his tenure, which ends in May 2026. This statement addresses ongoing speculation regarding the US adopting a CBDC.
Reasons Against CBDC by Trump Administration
- The Trump administration opposes CBDCs to protect individual freedoms.
- Concerns exist about government control over spending behaviors, as seen with China's Digital Yuan.
- The administration aims to maintain the US dollar's status as the global reserve currency while promoting stablecoins.
Impact on Stablecoins Industry
- The absence of a US CBDC is expected to benefit the stablecoins market, valued over $232 billion with a daily trading volume of about $40 billion.
- A regulatory framework for digital assets will support US-made stablecoins, particularly Circle’s USDC, which has a market cap of approximately $56 billion and a daily trading volume of around $4.3 billion.
- Adoption of USDC by entities like World Liberty Financial and Coinbase is contributing to its market dominance of about 25%.
- Other stablecoins such as PayPal USD (PYUSD) and Ripple USD (RLUSD) are also positioned for growth.