December 19, 2024
In a move that reflects the divergent views on digital assets and Bitcoin in particular, US Federal Reserve Chairman Jerome Powell recently confirmed that the central bank is “not allowed to own Bitcoin” and that he is not seeking any legal changes in this regard.
His comments came after questions were raised about President-elect Donald Trump’s promise to create a strategic reserve of Bitcoin, in an effort to boost the United States’ position in the cryptocurrency market. Click here for advertising services or press releases for the crypto project
During a press conference on Wednesday, Powell was asked about the feasibility of creating a national reserve of bitcoin. He responded by saying, “The law specifies what we can own, and we’re not asking for changes,” stressing that it’s up to Congress to decide.
This comes as a bill authored by Senator Cynthia Lummis (R-Wyoming) is being circulated in Congress proposing that the Treasury Department purchase 1 million BTC over five years.
Before the election, Trump publicly backed the idea of creating a strategic reserve of bitcoin. He recently told CNBC that he wanted the United States to be ahead of the curve, noting that other countries, including China, were moving forward with adopting digital currencies.
“We are going to do something great with cryptocurrencies because we don’t want to be overtaken by China or anyone else,” he said. “There are other countries adopting cryptocurrencies, and we want to be ahead of the curve.”
For its part, American states such as Pennsylvania have taken action, where Republican representatives have proposed legislation allowing local treasuries to invest in Bitcoin, digital financial assets, and ETFs.
Despite these trends, some experts, led by former New York Federal Reserve Bank President Bill Dudley, have criticized the idea, describing the strategic reserve as a useless deal for Americans, in an opinion piece published on Bloomberg last week.
Following these statements, the Federal Reserve announced a 25 basis point interest rate cut. Coinciding with the BTC price falling by nearly 5% to reach about $100,500.
According to some analysts, this decline reveals that investors are overestimating the impact of Bitcoin's virtual strategic reserve.
“The fact that BTC’s price took a hit on the Fed Chairman’s comments suggests that investors may be placing too much emphasis on the theoretical possibility of a strategic reserve of Bitcoin,” said Zach Pandel, head of research at Grayscale.
“We expect more countries to adopt Bitcoin, but the next step will likely be sovereign wealth funds in Asia or the Middle East, which already manage highly diversified asset portfolios,” he added.