Federal Reserve Chairman Jerome Powell dismissed the possibility of the Fed holding Bitcoin, emphasizing the legal constraints amid the rapidly changing crypto market landscape in the United States.
The Fed asserts it does not hold Bitcoin
Powell reaffirmed the central bank's stance on Bitcoin during a press conference on Wednesday following the rate cut decision. When asked about the possibility of the U.S. government building Bitcoin reserves, Powell dismissed this citing stringent legal constraints.
'We are not allowed to own Bitcoin. The Federal Reserve Act specifies what we can own, and Bitcoin is not on that list. We are also not seeking a change in the law. This is a matter for Congress to consider, but it is not something the Fed is actively pursuing.'
Jerome Powell – Chairman of the U.S. Fed
Powell's comments continue to reflect his long-standing cautious attitude towards cryptocurrency. Previously, he described Bitcoin as a speculative asset, lacking the stability to become a legitimate currency. In 2021, Powell stated that cryptocurrency 'is not really useful as a store of value' and criticized their high volatility, which he argued poses significant risks to investors and the financial system. He also clearly distinguished between cryptocurrencies like Bitcoin and central bank digital currencies (CBDC), emphasizing that CBDCs are a safer and more tightly regulated initiative.
Legal constraints and market prospects
According to regulations, the Federal Reserve Act limits the central bank's holdings to U.S. government bonds and other high-quality assets. Although the Fed has previously expanded its asset holdings during economic crises, such as the 2008 financial crisis, cryptocurrencies remain outside the Fed's regulatory scope.
Meanwhile, some legislative efforts like Senator Cynthia Lummis's Bitcoin Act have sought to integrate Bitcoin into the U.S. financial system. However, these initiatives have faced strong opposition from lawmakers concerned about the lack of transparency and the risk of misuse of cryptocurrency.
A new vision from the incoming administration
Notably, President-elect Donald Trump announced plans to establish a national Bitcoin reserve fund, aimed at positioning the United States as a global leader in cryptocurrency. This plan includes the government acquiring a significant amount of Bitcoin, with much of the funding coming from assets seized in criminal cases.
This proposal has had a significant impact on the market, as Bitcoin prices surpassed $100,000, reflecting investor optimism in light of anticipated positive regulatory changes under the new administration. Trump's appointment of David Sacks as AI and cryptocurrency Czar at the White House also underscores his commitment to integrating digital assets into the national economic strategy.
Along with the development of cryptocurrency and CBDC policies, the future of digital assets in the United States promises to witness significant volatility while opening up numerous potential opportunities.
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