Powell Rules Out Bitcoin Stockpiling by the Fed, Trump Pushes for Strategic Reserve
Federal Reserve Chair Jerome Powell has clarified the U.S. central bank’s stance on Bitcoin ownership, dismissing any plans to stockpile the cryptocurrency or change existing laws to allow it. His comments come amid growing speculation about the creation of a Strategic Bitcoin Reserve under the incoming administration of President-elect Donald Trump.
Powell: "Fed Cannot Hold Bitcoin"
At a press conference following the Federal Reserve's latest policy meeting, Powell reaffirmed that the Fed is legally barred from holding Bitcoin. “We’re not allowed to own Bitcoin,” he stated, adding that any legislative changes enabling the Fed to acquire cryptocurrencies would be a matter for Congress to decide. “We are not looking for a law change at the Fed,” Powell emphasized.
His remarks followed the Fed’s decision to cut interest rates while signaling uncertainty about the direction of monetary policy in the months ahead.
Trump’s Vision: A U.S. Strategic Bitcoin Reserve
President-elect Donald Trump has floated the idea of creating a U.S. Strategic Bitcoin Reserve, sparking debate in the cryptocurrency community. Trump suggested the reserve could start with Bitcoin seized from criminals, a stockpile currently estimated at 200,000 tokens worth approximately $21 billion.
The president-elect has not yet provided detailed plans for the reserve but has positioned it as part of his broader pro-crypto agenda. Bitcoin prices have surged following Trump’s election victory on November 5, with market optimism fueled by expectations of a more hands-off approach to cryptocurrency regulation.
Legislative Push for a Bitcoin Reserve
Republican Senator Cynthia Lummis has introduced a bill proposing the establishment of a Strategic Bitcoin Reserve. The bill outlines an annual purchase of 200,000 Bitcoin by the U.S. Treasury until the reserve reaches one million tokens. These acquisitions would be funded through Federal Reserve bank deposits and gold holdings.
However, creating such a reserve would likely require Congressional approval and the issuance of new Treasury debt, according to a Barclays analysis. The proposal faces potential resistance from the Fed, which has historically been skeptical of cryptocurrencies.
The Fed’s Crypto Perspective
Powell’s comments align with the Federal Reserve’s broader caution regarding cryptocurrencies. While the Fed regulates banks interacting with crypto businesses to ensure financial stability, it does not directly regulate crypto assets. Powell noted that the Fed’s primary focus is on safeguarding the banking sector from risks posed by cryptocurrencies.
Previously, the Fed had explored the idea of a digital dollar but has since shifted its focus to supporting private-sector innovation in payment technologies.
Trump’s Pro-Crypto Administration
President-elect Trump has signaled strong support for the crypto industry with his recent appointments. He plans to name former PayPal executive David Sacks as the White House AI and Crypto Czar and pro-crypto consultant Paul Atkins to lead the Securities and Exchange Commission (SEC).
These appointments reflect a shift in the federal government’s stance toward cryptocurrencies, prioritizing innovation and adoption while grappling with regulatory challenges.
Market Reactions and Challenges Ahead
Powell’s dismissal of a Fed-led Bitcoin initiative has tempered Bitcoin’s recent rally, which saw its price more than double this year to over $100,000. Analysts warn that Bitcoin’s volatility remains a key challenge for its utility as a reserve currency.
While the idea of a Strategic Bitcoin Reserve has energized pro-crypto advocates, its implementation faces significant legal, financial, and logistical hurdles. The coming months will reveal whether Trump’s administration can overcome these obstacles to realize its ambitious vision for Bitcoin’s role in U.S. financial strategy.