First, and maybe foremost, the Fed could be conflicted. As a substitute cost service, stablecoins compete with the Fed’s personal cost infrastructure, together with FedNow, the central financial institution’s on the spot cost service. The Fed’s consideration of a central financial institution digital foreign money would depart it additional conflicted when regulating privately issued stablecoins, as these two digital representations of the greenback may be seen as substitutes. Any authorities physique, the Fed included, would wrestle to objectively analyze non-public cost improvements that compete with its personal providers. Giving the Fed the authority to control stablecoins unfairly stacks the deck in opposition to cost alternate options. Merely put, the fox shouldn’t be allowed to protect the henhouse.
