Jerome Powell Says Fed Has Little to Do With Bitcoin Stockpile
Federal Reserve Chair Jerome Powell says the central bank is “not allowed to own Bitcoin,” leaving the decision to Congress.
Replying to a reporter’s question during the press conference following the FOMC decision, Powell said that the Fed has little to do with Bitcoin stockpile.
“We are not allowed to own Bitcoin,” said Powell. “That’s the kind of thing for Congress to consider.” He further stressed that the central bank is not looking to change that.
His statements came after questions about how the government could possibly hold Bitcoin reserve, akin to holding gold.
On Wednesday, the Fed lowered interest rates by 0.25% to its current target range of 4.25% and 4.50%, as anticipated.
The Federal Reserve Act does not allow the central bank to hold government bonds or highly speculative assets. Though the Fed expanded its asset purchases during economic crisis such as the 2008 financial crash, Bitcoin remains out of its consideration.
Powell’s comments coincide with the recent cautious tone on digital assets. He described Bitcoin as a speculative asset, suggesting that its primary competition is with gold rather than the US dollar. In 2021, the Fed chair said that crypto is not useful as a store of value due to its intrinsic volatility.
Powell has also differentiated cryptos like Bitcoin and central bank digital currencies (CBDCs), highlighting that the latter is much safer.
Meanwhile, President-elect Donald Trump hinted plans to create a U.S. Bitcoin strategic reserve. His speculation spiked the world’s largest crypto to an all-time high above $106,000 on Monday.
During a recent CNBC interview, Trump said, “We’re gonna do something great with crypto,” comparing it with the U.S. Strategic Petroleum Reserve.
Bitcoin Slumps Post Powell Remarks
Following Powell’s dismissal over the idea of the Fed holding Bitcoin, the asset fell 5.17% to just above $100,000. The Fed rate cuts have also dragged down the Nasdaq 100 by around 2%.
Bitcoin is trading at $101,170 at the time of writing.
Additionally, altcoin majors including XRP, Cardano’s ADA and Litecoin’s LTC, were down 10% over the past 24 hours.
Source: cryptonews.com
