Jerome Powell confirmed that the Federal Reserve cannot hold Bitcoin, leaving it for Congress to decide. Although some lawmakers and President-elect Trump support a U.S. Bitcoin reserve, Powell's comments caused Bitcoin to drop 5.7%, with other major cryptocurrencies also losing value and the stock market reacting negatively.

Powell says no to the U.S. Bitcoin reserve fund

Jerome Powell, Chairman of the Fed, stated in a press conference that the U.S. central bank is not allowed to hold Bitcoin. He explained that under the Federal Reserve Act, there are regulations regarding what banks can own, and Bitcoin is not part of that regulation.

He also stated that the Federal Reserve is looking for something other than changing the law by letting Congress make the decision.

“We are not allowed to own bitcoin. The Federal Reserve Act specifies what we can own, and we are not seeking a change in the law. That is a decision made by Congress, not the Fed.”

These statements were made after questions arose about the U.S. government's ability to build a Bitcoin reserve, similar to how they hold gold.

Powell emphasized that any decision regarding the U.S. government's holding of Bitcoin would depend on Congress, not the Federal Reserve. He clarified that the central bank is interested in something other than engaging in Bitcoin or changing its laws.

Despite Powell's tough stance, there is increasing interest in Bitcoin as a potential asset that the U.S. government might hold. Trump has endorsed this idea, suggesting that the U.S. should not fall behind other countries in the global cryptocurrency race.

Some senators supporting cryptocurrency include Senator Cynthia Lummis from Wyoming, who has pushed for this idea. Lummis even drafted a bill requiring the U.S. Treasury to purchase one million Bitcoin within the next five years.

President-elect Donald Trump also supports the idea of the United States creating a Bitcoin reserve fund, stating that the U.S. needs to stay ahead of countries like China by adopting digital currency.

Market reaction to Powell's comments

Following Powell's comments, the cryptocurrency market reacted swiftly. Bitcoin fell to $100,300, down about 5.7% in the past 24 hours. At the time the press release was issued, Bitcoin was trading at $100,740.

The cryptocurrency market also declined. Ethereum fell by 6.8%, Binance Coin (BNB) dropped by 4.6%, and Solana (SOL) decreased by 8.1%. Dogecoin (DOGE) performed the worst among the top 10 tokens, falling 11% to $0.348.

The stock market also reacted negatively to Powell's comments. The S&P 500 closed down 1.55%, and the Nasdaq 100 fell about 2%.

These developments indicate how the market is reacting to news about government policy, especially regarding cryptocurrencies like Bitcoin. Powell's stance against Bitcoin reserves has created instability among investors, and they quickly adjusted their positions by selling.

Jerome Powell's comments clearly indicate that the Federal Reserve is not interested in holding Bitcoin or supporting a U.S. Bitcoin reserve. The market's response shows how dependent Bitcoin and other cryptocurrencies are on investors and policymakers.

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