Jerome Powell says the Federal Reserve does not buy Bitcoin and does not advocate for Bitcoin reserves
Jerome Powell made it clear that the Federal Reserve will not buy Bitcoin; that decision is up to Congress. Although some lawmakers and President Trump want the U.S. to hold some Bitcoin, as soon as Powell made this statement, Bitcoin immediately dropped by 5.7%, and other cryptocurrencies followed suit, affecting the stock market as well.
Powell does not support the U.S. holding Bitcoin
The head of the Federal Reserve, Jerome Powell, said at a press conference that the Federal Reserve cannot buy Bitcoin. He explained that the Federal Reserve Act specifies what assets banks can purchase, and Bitcoin is not included.
He also mentioned that the Federal Reserve is looking for ways to address the issue, but changes to the law would need to come from Congress.
"We cannot buy Bitcoin. The Federal Reserve Act dictates this, and we do not change the law. This is a matter for Congress, not the Federal Reserve."
Previously, some speculated whether the U.S. government would also hold some Bitcoin, similar to holding gold.
Powell emphasized that whether or not to hold Bitcoin is up to Congress, not the Federal Reserve. He clarified that the central bank has no interest in getting involved with Bitcoin or changing the law.
Despite Powell's clear stance, interest in Bitcoin as a government asset is growing. Trump supports this idea, saying the U.S. should not fall behind in cryptocurrency.
Some pro-cryptocurrency lawmakers, like Cynthia Lummis from Wyoming, have been pushing this idea. Lummis even proposed a bill for the Treasury to buy a million Bitcoins over five years.
Trump also supports holding Bitcoin, stating that the U.S. needs to catch up with countries like China.
Market reaction to Powell's remarks
As soon as Powell spoke, the cryptocurrency market reacted immediately. Bitcoin fell to $100,300, dropping 5.7% in one day. At the time of writing this article, Bitcoin had returned to $100,740.
Other cryptocurrencies also declined. Ethereum dropped by 6.8%, Binance Coin fell by 4.6%, and Solana dropped by 8.1%. Dogecoin suffered the most, declining by 11% to $0.348.
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