Fed Chair Jerome Powell says cryptocurrencies are a 'failed' payment mechanism and stablecoins need to be regulated

• Cryptocurrencies have failed to become a viable payment method Fed chair Jerome Powell told a said Thursday.
• Powell reiterated that stablecoins - and their lack of regulation - are a key concern for the Fed.
• Worries about stablecoins abound, including that they could be used to manipulate markets and have dubious pegs to the dollar.

Cryptocurrencies have tried and failed to become a viable payment method, other than their use by privacy diehards, Federal Reserve Chairman Jerome Powell told the Senate Banking Committee on Thursday.

"With cryptocurrencies, it's not that they didn't aspire to be a payment mechanism, it's that they've completely failed to become one, except for people who desire anonymity, of course, for whatever reason," he told Sen. Cynthia Lummis of Wyoming.

Elaborating on testimony he gave on Wednesday to the House Financial Services Committee, Powell reiterated that stablecoins - and their lack of regulation - are a key concern for the Fed.

"Really the question is stablecoins," he said, comparing the dollar-pegged cryptocurrencies to money-market funds or bank deposits. "They're growing incredibly fast, but without appropriate regulation."

"If we're going to have something that looks just like a money-market fund, or a bank deposit, or a narrow bank - and it's growing really fast - we really ought to have appropriate regulation. And today we don't," added Powell.

On Wednesday, Powell told the House committee that an official US digital currency could obviate the need for cryptocurrencies or stablecoins.

Worries about stablecoins abound, and include fears that they could be used to manipulate markets and have dubious pegs to the dollar. Last year, several House representatives proposed legislation that would put stablecoins under the purview of traditional banking regulation.