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